The siege of Dan River: Virginia textile mills vs. a Northern investor
The citizens of this 45,000-population textile and tobacco center feel under siege again - once more by a Northerner. A New York investor, Carl Icahn, has been waging a bitter battle to take over the city's largest employer, Dan River Inc.Skip to next paragraph
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The city previously felt under siege back in April of 1865, when Jefferson Davis, barely ahead of advancing Union troops, fled here with his Cabinet, making it the last capital of the Confederacy.
One of the nation's largest textile manufacturers, Dan River has survived floods, fires, and strikes to nourish the city's growth for more than a century. And townspeople have come to equate Dan River's health with that of their city.
When Mr. Icahn, a well-known Wall Street takeover artist, began buying up Dan River stock in September, citizens, businessmen, and management united, for different reasons, to buy up company stock in what they saw as a battle for their very existence.
Despite those efforts, Mr. Icahn succeeded in buying 30 percent of the company's common stock by December in a bidding war that has pushed the company's stock price from $15.50 a share in September to as high as $20.50 in recent weeks. Mr. Icahn and Dan River agreed in late January to stop buying or selling Dan River stock until September while they attempt to settle a number of lawsuits filed against each other.
The outcome is still unclear. Despite the January agreement, Dan River is attempting to form a private, employee-owned corporation that would buy out all common shares - including Icahn's - at $22.50 a share. But it is uncertain whether Icahn will support the proposal, which needs approval from two-thirds of all shareholders.
''There is a great deal of concern in this town,'' said Elsie Slayton, vice-president at Saunders Building Supply Inc., which spent its entire 1983 advertising budget - $18,000 - to buy 1,000 shares of Dan River stock.
''We're just hoping Dan River can find some way to whip Icahn. We want him whipped,'' said Ms. Slayton, whose company has depended on Dan River for half its business for the last 40 years. She said Mr. Icahn ''isn't interested in the community. He's interested in dollars instead of human beings.''
In a burst of enlightened self-interest, citizens, rich and poor, have lined up at local brokerage firms to buy from one to 1,000 shares of Dan River stock, and automobile and appliance dealers have offered shares with purchases of merchandise.
Dan River operates 21 plants in four states. And the company employs 8,000 people in Danville who earn a $105 million annual payroll, cushioning an area economy already burdened with an 11.2 percent unemployment rate. Townspeople have been afraid that, should Mr. Icahn gain control, he might shut down the mills and sell Dan River off piece by piece.
D.C. Hastings, president of Virginia Bank & Trust Company, is one of a dozen Main Street businessmen who contributed thousands of dollars to finance full-page advertisements in the city's daily newspaper, urging citizens: ''KEEP DAN RIVER AT HOME - BUY DAN RIVER STOCK!''
''If Dan River doesn't make it, we don't either,'' said Hastings, echoing other businessmen. He said the bank is ''highly dependent'' on Dan River.
''There is a lot of animosity,'' Mr. Hastings said. Mr. Icahn ''is going to walk away with money he didn't earn.''
Edward Johnson, director of a securities research arm of Prescott, Ball & Turben, a brokerage, said the Icahn track record justifies townspeople's fears.