Sheaffer battle heads for US court

The battle for Sheaffer, the loss-making American pens business, could come to a US court next week as a UK venture capital company fights it out with Bic, the French giant best known for Biros and disposable razors. Nigel Cope, City Correspondent, reports on a messy affair.

Alchemy, the venture capital company run by Jon Moulton, is hoping to secure an early court hearing in New York to decide who will win control of Sheaffer, one of the world's best-known pen makers.

A hearing is not scheduled until January but Alchemy says Sheaffer's finances are so precarious that a delay would prove damaging to the business. It is keen to decide the matter so improvements can be made in time for the all-important Christmas selling season. It is pushing for a hearing in the Appellant Court in New York as soon as possible.

The court's decision should end a bruising battle between Alchemy and Bic, both of whom feel they have the right to buy Sheaffer. Both are offering around $30m for the business.

Sheaffer certainly needs fresh backing. Though a well-known name it has been loss-making for years and last year lost "several million dollars" on sales of around pounds 35m. It has suffered from lack of product innovation and fierce competition from rivals, particularly Gillette, the razor company which owns the Parker, Watermans and Papermate brands.

The bid battle dates back to last year and focuses on a right of refusal which the Sheaffer management have to buy the company.

Bic made an approach to Genifor, the current owners of Sheaffer, last year. Genifor is a Geneva-based, Luxembourg quoted company with Middle Eastern backing, which paid $135m for Sheaffer 10 years ago.

The talks later broke down and the Sheaffer management, led by ex-Parker Pen executives Owen Jones and Shane Dolohanty, approached Alchemy for funding for a management buy-out. Alchemy then approached Genifor who re-ignited talks with Bic to generate competition. Bic later signed an agreement, for around $30m, with the acknowledgement that management had a right of refusal.

Though Alchemy later said it would exercise that right and match the Bic offer, Bic went to court to block it, saying it was Alchemy that had taken up the right of refusal, not the management.

Martin Bolland of Alchemy expressed confidence yesterday that a hearing would go in its favour. "The first hearing went overwhelming in our favour, then they appealed," he said

If Alchemy's management buy-out team wins the legal fight, it says it will revitalise Sheaffer by investing in new product development.

It would be pleasing deal for Jon Moulton, who backed the buy-out of Parker Pen from Manpower when he was at Schroder Ventures.

Parker Pen's middle management team then included Mr Jones and Mr Dolohanty, who are now respectively the chief executive an chief financial officer of Sheaffer.

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