A peek into Alberto Culver’s proposed merger…

When Unilever (UN) announced on Sept. 27 that it planned to buy Alberto Culver (ACV) for $3.7 billion cash (which would pay investors $37.50 per share), CEO Paul Polman opined that the acquisition provides strategic organic growth opportunities for the Netherlands-based company and its various divisions. Hopefully that’s true, but the deal will yield a pretty nice payout for the executive officers and directors of Alberto Culver, too.

According to the recent merger proxy, the biggest winners will be Executive Chairman Carol Bernick (the daughter of Alberto Culver’s founder, Leonard Lavin) and President/CEO V. James Marino. They will receive $29.5 million and $14.7 million, respectively, just for their stock options. They’ll also get $97,500 and nearly $2.2 million for their respective RSUs, and a few hundred thousand more for their performance units.

The execs will also get an award under the Management Incentive Plan that can’t be quantified until there is a closing date for the merger and the company’s performance through that date has been established. And Bernick will get nearly $4.72 million for severance and benefit costs, while Marino will get almost $6.68 million for those categories. Bernick gets an extra benefit, though. The filing states that she will

“…receive $200,000 per year for 15 years upon termination of her employment, a split dollar life insurance agreement and a lease for approximately 1,200 square feet of office space in Alberto Culver’s headquarters, will continue in effect following the merger.”

The negotiations seem more complicated than some deals that we’ve seen, partly because they’ve also involved members of founder Lavin’s family and representatives acting on the family’s behalf. For those interested in the background of the deal, there’s a supplemental disclosure filed Nov. 29 that provides more detail than the earlier version of events contained in the Oct. 15 preliminary proxy.

But we couldn’t help but notice a slightly different account of how the deal got started in the first place. If you go by this Schedule 14A, filed Sept. 27, in answer to the questions “How did this deal come about? Who approached whom?”, Alberto Culver’s answer is:

“We knew from discussions with numerous bankers and investment advisors that Unilever had a commitment to growing their personal care business and their infrastructure, geographic footprint and resources could provide accelerated growth for our brands. Through our banker we approached Unilever….”

That’s not the same answer, as we read it, in the Nov. 29 filing, which recounts the acquisition negotiations starting as follows:

“On or about April 28, 2010, an investment banker purporting to represent another company involved in our industry, which we refer to as Company A, contacted Carol Bernick, the executive chairman of our board of directors…. the investment banker confirmed that the purpose of the meeting would be to discuss a possible acquisition of the Company.”

But at this point, any discrepancies may not matter. The supplemental disclosures appear to have satisfied the shareholders who sued Alberto Culver for an injunction and damages after the deal was announced. They’ve reached a preliminary settlement with the company that is waiting for court approval. The final hurdle will be getting the consent of shareholders, who are scheduled to vote on the proposed merger December 17.


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