Olson Farms Stock Sought : Winn Unit Makes Offer for 30% of Egg Producer

A unit of Winn Enterprises of Fullerton has offered at least $6.5 million in cash to purchase nearly 30% of Olson Farms Inc., one of the largest egg producers in the state.

But Olson’s co-founder and largest shareholder also wants the stock and has sued to stop the sale to Southwest Overthrust Oil & Gas Co. of Anaheim. Southwest is a subsidiary of Mountain West Savings & Loan Assn. of Salt Lake City, which in turn is owned by Winn.

Both Southwest and C. Dean Olson, the 77-year-old director of Olson Farms, have made cash offers to purchase 500,000 shares of new stock from the Sherman Oaks egg producer and manufacturer of plastic containers for eggs and other foods, said Jonathan M. Berge, Olson Farms’ executive vice president and general counsel.

One of the suitors has offered $13 per share while the other is bidding $13.50 a share. None of the parties involved would say who was offering the higher amount.

A decision on the sale by Olson’s board of directors is expected within the next two weeks, Berge said.

But in seeking an injunction to stop a possible sale to Southwest, C. Dean Olson has charged Olson’s board with a “breach of fiduciary duties . . . for negotiating to sell the stock” to Winn’s affiliate, Berge said. The complaint, filed April 25 in Los Angeles Superior Court, also names Southwest, Winn and Mountain West S&L.;

C. Dean Olson and his three children now own 42.8% of the company and would own nearly 61% of the stock if the offer is accepted. Olson’s brother, H. Glenn Olson, currently owns about 10% of Olson Farms’ stock.

R. Sam Christensen, executive vice president of Southwest, dismissed the lawsuit as “just a tactic (by Olson) to get the company to accept his offer.”

Although Winn has been on a recent acquisition binge, its affiliate’s bid to purchase Olson stock has confused industry analysts. The purchase of the egg company would seem a natural for Winn’s Knudsen Foods Inc. subsidiary, which last month became one of the West’s largest dairy companies with its purchase of San Francisco-based Foremost Dairies Inc. But analysts say it seems to make little sense for Winn to use Southwest to woo Olson.

Said one industry observer, “You try and figure it out.”

Christensen, however, said Knudsen is becoming a “more focused” dairy company and that any acquisition of Olson stock “would not have fit Knudsen’s game plan.” The acquisition would be ideal for Southwest, he said, because Winn’s Mountain West division has been anxious to turn Southwest into an operating company.

Southwest, with $14 million in equity and $14 million in cash, has not been an operating company since Mountain West purchased it in November, 1984.

Besides being an egg producer, Olson is also a plastics manufacturer.

Although 1984 sales of $97 million at its egg division were nearly double its plastics division sales of $49 million, plastic sales have been rising in recent years while egg sales have been falling, Berge said.

In fiscal 1984, Olson posted earnings of $1 million, down 60% from earnings of $2.5 million the year before. The drop in profit was caused primarily by a severe drop in egg prices last year, Berge said.