Shares of Farmer Bros. Jump as CEO Death Prompts Speculation
1/17/2005
Los Angeles Business Journal Staff
Nearly a week after its chairman and chief
executive committed suicide, Farmer Bros. Co.’s stock continued to rise
as speculation swirled that the company could be sold.
Shares were up more than 31 percent in the
four days following word of Roy E. Farmer’s death from a
self-inflicted gunshot wound on Jan. 7. It closed at $29.50 a share on
Jan. 13, up from its Jan. 7 close of $22.49.
“If anyone has an alternative to a sale
that would have the prospect of an equivalent value, I’m sure the
shareholders would be receptive,” said Gary Lutin, who runs an
investor forum. “So far, neither management nor anyone else has come
up with such an alternative.”
Jim Lucas, spokesman for Torrance-based
Farmer Bros., declined to comment on the future direction of the
coffee roaster.
It’s also unclear what will happen with
the nearly 40 percent stake in the company held in a trust that was
headed by Farmer, who was 52. The Employee Stock Ownership Plan, which
has a provision that allows employees to determine the voting of ESOP
shares, holds another 20 percent.
“Right now, there isn’t any information,”
said Lucas.
Lutin has been riled by the lack of
communication, along with a comment from Lucas in the Jan. 13 edition
of the Daily Breeze in which he was quoted as saying a new trustee was
“a private matter.” Lutin has fired off a letter to Farmer Bros. and
copied the Securities and Exchange Commission.
“Investors should know who owns a third of
their company’s voting stock,” the letter said. “Some delay in
reporting a change is understandable under the circumstances, but I
encourage you now to promptly provide the information that is needed
by shareholders and required by securities regulations.”
While there aren’t any other members of
the Farmer family on the company’s management team, Farmer is survived
by his mother, a brother, two sisters and several nieces and nephews.
The company was founded in 1912 by the Farmer family.
Guenter Berger, who had served as vice
president of production for Farmer Bros. since 1990, was elected
interim chief executive of the publicly held company during a special
meeting held Jan. 9.
Farmer Bros. has posted 12 straight
quarters of year-over-year earnings declines.
– Rebecca Flass
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