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Dexter’s drastic defence

Client: Dexter CorporationType of advice: defence of hostile bid from International Specialty ProductsAdvisor: Lehman Brothers

The history behind International Specialty Products' attempt to buy the Dexter Corporation dates back to 1998. Dexter was in the process of buying a controlling stake in a company called Life Technologies, with a view to a takeover. ISP started to buy stakes in both companies as a way of halting the deal. By September that year Dexter had a 52% stake in Life Technologies, ISP owned 9.9% of Dexter and 21.7% of Life Technologies, which was just enough to stop Dexter getting the 80% shareholder approval it needed to acquire more.

That was the position for the next year, but ISP's deal-hungry chairman, Sam Heyman, grew anxious to unlock the value of the stakes he had taken in the two companies. He made some suggestions to Dexter, but the board regarded him as more of a corporate raider than a shareholder offering constructive advice; Heyman had a reputation for taking stakes in companies and breaking them up.

Eventually, in December 1999, Heyman made an offer for Dexter itself, for $45 a share. Dexter's board hired Lehman Brothers to assess the adequacy of the offer, and rejected it after the bankers said it was too low; at the time the stock was trading in the low $30s, but that was a 52-week low and the stock had traded as high as $50.

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