Standard: One for Four

Stocky, down-to-earth James S. Adams, 45-year-old President of Standard Brands Inc. (Fleischmann's Yeast, Royal Baking Powder, etc.) last week announced that he would ask his 115,000 common stockholders to convert every four shares they now hold into one share of new stock. Brokers raised interested eyebrows: reverse splitting had hardly been heard of on Wall Street since the dog days after the 1929 crash, when some companies used it to give their collapsing shares some semblance of dollar value.

Jim Adams' move was different: his stock is selling near its high for the year, his sales running 20% above last year. And his motivation was right in line with his executive background, first as a key man in the smart, slick advertising firm of Benton & Bowles and then as executive vice president of Colgate-Palmolive-Peet.

When Jim Adams left the soap business for the food business 18 months ago, lumbering Standard Brands' sales were running only 33% above their level in 1930, the company's first full year of business.

Its toughest competitor, big General Foods, with about the same 1930 sales, had almost doubled its business. During all this time General Foods had some 5,000,000 shares of common outstanding (and 6,000,000 authorized) v. 12,600,000 (and 20,000,000) for smaller Standard Brands. Result: in the past few years General's stock has sold up & down in the respectable $25-45 area, while Standard's has dogged around at the $310 level. To publicity-conscious Jim Adams (and to all his directors) this was bad business: 1) it gave the stock an unwarranted black eye as against the higher-priced stocks of comparable companies; 2) it made the stock less attractive as collateral.

But the biggest reason why Jim Adams wants to get his stock out of the cat-&-dog area is because he figures that it will thereby become a more useful vehicle for expansion. Low-priced stocks usually attract small-time speculators who figure they get more when they buy 100 shares at $5 than 10 shares at $50; when a businessman sells out his company for another company's stock, he looks for blue-chip prestige. Thus when Standard bought the Loudon Packing Co. (V8 Vegetable Juice) last March, the Loudons insisted on cash, but when General Foods bought out Snider Packing at about the same time, only common stock changed hands. Expansionist Adams, whose stock phrase is "some day we've got to grow some," figures that his fiscal contraction should enable Standard Brands to expand.

This file is automatically generated by a robot program, so reader's discretion is required.