0000950123-95-002375.txt : 19950818
0000950123-95-002375.hdr.sgml : 19950818
ACCESSION NUMBER: 0000950123-95-002375
CONFORMED SUBMISSION TYPE: SC 13D/A
PUBLIC DOCUMENT COUNT: 2
FILED AS OF DATE: 19950817
SROS: NYSE
GROUP MEMBERS: PURNENDU CHATTERJEE
GROUP MEMBERS: QIH MANAGEMENT INVESTOR, L.P.
GROUP MEMBERS: QIH MANAGEMENT, INC.
GROUP MEMBERS: QUANTUM INDUSTRIAL PARTNERS LDC
GROUP MEMBERS: SOROS GEORGE
SUBJECT COMPANY:
COMPANY DATA:
COMPANY CONFORMED NAME: PERKIN ELMER CORP
CENTRAL INDEX KEY: 0000077551
STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY ANALYTICAL INSTRUMENTS [3826]
IRS NUMBER: 060490270
STATE OF INCORPORATION: NY
FISCAL YEAR END: 0630
FILING VALUES:
FORM TYPE: SC 13D/A
SEC ACT: 1934 Act
SEC FILE NUMBER: 005-34889
FILM NUMBER: 95564862
BUSINESS ADDRESS:
STREET 1: 761 MAIN AVE
CITY: NORWALK
STATE: CT
ZIP: 06859-0001
BUSINESS PHONE: 2037621000
MAIL ADDRESS:
STREET 1: 761 MAIN AVENUE
CITY: NORWALK
STATE: CT
ZIP: 06859-0001
FILED BY:
COMPANY DATA:
COMPANY CONFORMED NAME: SOROS GEORGE
CENTRAL INDEX KEY: 0000900203
STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000]
STATE OF INCORPORATION: NY
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC 13D/A
BUSINESS ADDRESS:
STREET 1: 888 SEVENTH AVENUE
STREET 2: 33RD FLOOR
CITY: NEW YORK
STATE: NY
ZIP: 10106
BUSINESS PHONE: 212-262--6
MAIL ADDRESS:
STREET 1: 888 SEVENTH AVE
STREET 2: 33RD FLR
CITY: NEW YORK
STATE: NY
ZIP: 10106
SC 13D/A
1
AMENDMENT NO. 11 TO SCHEDULE 13D
1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 11)*
THE PERKIN-ELMER CORPORATION
_________________________________________________________
(Name of Issuer)
Common Stock, $1.00 Par Value
________________________________________________________________
(Title of Class of Securities)
714041-10-0
_____________________________
(CUSIP Number)
Stephen M. Vine, Esq.
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
399 Park Avenue
New York, New York 10022
(212) 872-1000
_________________________________________________________________
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
August 15, 1995
_______________________________________
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [ ]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosure provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
Continued on following page(s)
Page 1 of 16 Pages
Exhibit Index: Page 11
2
SCHEDULE 13D
CUSIP NO. 714041-10-0 PAGE 2 OF 16 PAGES
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
GEORGE SOROS
2 Check the Appropriate Box If a Member of a Group*
a. [ ]
b. [x]
3 SEC Use Only
4 Source of Funds*
AF, PF
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
United States
7 Sole Voting Power
Number of 542,381
Shares
Beneficially 8 Shared Voting Power
Owned By 3,173,831
Each
Reporting 9 Sole Dispositive Power
Person 542,381
With
10 Shared Dispositive Power
3,173,831
11 Aggregate Amount Beneficially Owned by Each Reporting Person
3,716,212
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain
Shares* [ ]
13 Percent of Class Represented By Amount in Row (11)
8.89%
14 Type of Reporting Person*
IA; IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
3
SCHEDULE 13D
CUSIP NO. 714041-10-0 PAGE 3 OF 16 PAGES
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
QUANTUM INDUSTRIAL PARTNERS LDC
2 Check the Appropriate Box If a Member of a Group*
a. [ ]
b. [x]
3 SEC Use Only
4 Source of Funds*
WC
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
Cayman Islands
7 Sole Voting Power
Number of 0
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 0
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
2,035,775
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain
Shares* [ ]
13 Percent of Class Represented By Amount in Row (11)
4.87%
14 Type of Reporting Person*
IC, OO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
4
SCHEDULE 13D
CUSIP NO. 714041-10-0 PAGE 4 OF 16 PAGES
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
QIH MANAGEMENT INVESTOR, L.P.
2 Check the Appropriate Box If a Member of a Group*
a. [ ]
b. [x]
3 SEC Use Only
4 Source of Funds*
AF
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
Delaware
7 Sole Voting Power
Number of 0
Shares
Beneficially 8 Shared Voting Power
Owned By 2,035,775
Each
Reporting 9 Sole Dispositive Power
Person 0
With
10 Shared Dispositive Power
2,035,775
11 Aggregate Amount Beneficially Owned by Each Reporting Person
2,035,775
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain
Shares* [ ]
13 Percent of Class Represented By Amount in Row (11)
4.87%
14 Type of Reporting Person*
IA; PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
5
SCHEDULE 13D
CUSIP NO. 714041-10-0 PAGE 5 OF 16 PAGES
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
QIH MANAGEMENT, INC.
2 Check the Appropriate Box If a Member of a Group*
a. [ ]
b. [x]
3 SEC Use Only
4 Source of Funds*
AF
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
Delaware
7 Sole Voting Power
Number of 0
Shares
Beneficially 8 Shared Voting Power
Owned By 2,035,775
Each
Reporting 9 Sole Dispositive Power
Person 0
With
10 Shared Dispositive Power
2,035,775
11 Aggregate Amount Beneficially Owned by Each Reporting Person
2,035,775
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain
Shares* [ ]
13 Percent of Class Represented By Amount in Row (11)
4.87%
14 Type of Reporting Person*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
6
SCHEDULE 13D
CUSIP NO. 714041-10-0 PAGE 6 OF 16 PAGES
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
PURNENDU CHATTERJEE
2 Check the Appropriate Box If a Member of a Group*
a. [ ]
b. [x]
3 SEC Use Only
4 Source of Funds*
AF, PF
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
UNITED STATES
7 Sole Voting Power
Number of 393,136
Shares
Beneficially 8 Shared Voting Power
Owned By 2,035,775
Each
Reporting 9 Sole Dispositive Power
Person 393,136
With
10 Shared Dispositive Power
2,035,775
11 Aggregate Amount Beneficially Owned by Each Reporting Person
2,428,911
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain
Shares* [ ]
13 Percent of Class Represented By Amount in Row (11)
5.81%
14 Type of Reporting Person*
IA; IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
7
Page 7
This Amendment No. 11 to Schedule 13D relates to shares of
Common Stock, $1.00 par value (the "Shares"), of The Perkin-Elmer Corporation
(the "Issuer") and further amends the initial statement on Schedule 13D filed
on January 7, 1991 and all amendments thereto (the "Initial Statement"). This
Amendment No. 11 also serves as Amendment No. 2 with respect to Quantum
Industrial Partners LDC, QIH Management Investor, L.P. and QIH Management, Inc.
This Amendment No. 11 is being filed by the Reporting Persons (as defined
below) to report the transmittal of a letter from a representative of the
Reporting Persons to the Issuer regarding the Issuer's business. Reference is
made to the Initial Statement as amended for certain terms used herein and not
otherwise defined herein. The Initial Statement is hereby supplementally
amended as follows:
ITEM 2. IDENTITY AND BACKGROUND.
Updated information concerning the identity of the Managing
Directors of SFM is set forth in Annex A hereto, which is incorporated by
reference in response to this Item 2.
ITEM 4. PURPOSE OF TRANSACTION.
On August 15, 1995, Dr. Chatterjee delivered to the Issuer and
each member of its Board of Directors a letter, a copy of which is filed as
Exhibit J hereto and incorporated herein by reference, which expresses the
belief of the Reporting Persons that shareholder value in the Issuer would be
greatly enhanced if the Issuer were to split into two separate operations --
one focused on the Issuer's Life Science business and the other on its
Analytical Instruments business. This letter requests the Board of Directors
to consider this proposal as a matter of urgency in conjunction with the
Issuer's imminent selection of a new Chief Executive Officer. In connection
with the foregoing, Dr. Chatterjee intends to pursue further discussions with
the Board of Directors and may send this letter to a number of institutional
shareholders of the Issuer in order to elicit their views and opinions in
respect of the matters raised therein.
As of the date hereof, there exist no agreements or
understandings between the Reporting Persons and any other persons or entities
which would cause such persons and entities to be a "group" within the meaning
of Section 13(d)(3) of the Securities Exchange Act of 1934.
Although the foregoing reflects the Reporting Persons' current
intentions, the Reporting Persons reserve the right to take any other action
with respect to their Shares. Except as set forth above, none of the Reporting
Persons has any present plans or intentions which would result in or relate to
any of the transactions described in paragraphs (a) through (j) of Item 4 of
Schedule 13D.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
(j) Form of Letter dated August 15, 1995 from Purnendu
Chatterjee to the Perkin-Elmer Corporation and each member of its Board of
Directors.
8
Page 8
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
Date: August 17, 1995 QUANTUM INDUSTRIAL PARTNERS LDC
By: /s/ Gary S. Gladstein
-------------------------------
Gary S. Gladstein
Attorney-in-Fact
Date: August 17, 1995 QIH MANAGEMENT INVESTOR, L.P.
By: QIH Management, Inc.
General Partner
By: /s/ Gary S. Gladstein
-------------------------
Gary S. Gladstein
President
Date: August 17, 1995 QIH MANAGEMENT, INC.
By: /s/ Gary S. Gladstein
--------------------------------
Gary S. Gladstein
President
Date: August 17, 1995 GEORGE SOROS
By: /s/ Gary S. Gladstein
--------------------------------
Gary S. Gladstein
Attorney-in-Fact
Date: August 17, 1995 PURNENDU CHATTERJEE
By: /s/ Peter Hurwitz
-------------------------------
Peter Hurwitz
Attorney-in-Fact
9
Page 9
ANNEX A
The following is a list of all of the persons who serve as
Managing Directors of Soros Fund Management ("SFM"):
Scott K. H. Bessent
Walter Burlock
Stanley Druckenmiller
Arminio Fraga
Gary Gladstein
Robert K. Jermain
Donald H. Krueger
Elizabeth Larson
Jay Misra
Gabriel S. Nechamkin
Steven Okin
Dale Precoda
Lief D. Rosenblatt
Mark D. Sonnino
Sean C. Warren
Each of the above-listed persons is a United States citizen whose principal
occupation is serving as Managing Director of SFM, and each has a business
address c/o Soros Fund Management, 888 Seventh Avenue, New York, New York
10106. During the past five years, none of the above-listed persons has been
(i) convicted in a criminal proceeding, or (ii) a party to any civil proceeding
as a result of which any such persons has been subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws, or finding any
violations with respect to such laws.
10
Page 10
INDEX OF EXHIBITS
EXHIBIT PAGE
------- ----
J Form of Letter dated August 15, 1995 from Purnendu Chatterjee 11
to the Perkin-Elmer Corporation and each member of its
Board of Directors.
EX-99.J
2
LETTER FROM PURNENDU CHATTERJEE TO PERKIN-ELMER
1
Exhibit J
Form of Letter
August 15, 1995
[Name]
The Perkin-Elmer Corporation
761 Main Avenue
Norwalk, CT 06859-0001
Dear [Name]:
We are long-standing shareholders of Perkin-Elmer stock, and are
deeply frustrated by the stock's poor performance, particularly in light of the
company's business potential and the vibrant equity markets which have left
Perkin-Elmer behind. We have studied the company carefully and believe
strongly in the spin-off strategy to build shareholder value which is described
in this letter. By sharing our thoughts directly with you, we hope that we
might work together constructively to help Perkin-Elmer achieve its full
potential.
We have entered an era in which members of Boards, who represent
the interests of the shareholders, can no longer ignore the persistent message
of the markets. In this spirit, we ask that you consider our ideas and give us
an opportunity to explain them to you directly at your meeting this week.
Urgency stems from the forthcoming management succession and the
impact of your CEO selection on the success of any new strategy. We believe
that it is now the Board's responsibility to determine the strategic direction
that Perkin-Elmer will take, and that this should be finalized before naming a
new CEO. In particular, several of the options the Board must consider would
require hiring two, not one, chief executives, to manage two very different
businesses.
We strongly believe, given our Company's position and markets,
that the dominant strategy for delivering shareholder value is to
split into two separate operations - one focused on Life Science,
one on Analytical Instruments. This would allow each operation
individually to maximize its opportunities in the capital
markets. P-E Life Sciences would trade at a premium P/E to its
growth rate, and its stock become an inexpensive currency to use
for appropriate acquisitions, and thus accelerate its growth
further. P-E AI could also use a different capital
2
structure, appropriate to its strategy of total business productivity
improvement and leading the industry's consolidation.
STOCK PERFORMANCE
Over the last 10 years, while the S&P 500 has returned over 15%
annually, Perkin-Elmer stock has returned only 4.6% per year, just barely over
the rate of inflation. Recent under-performance against a group of competitors
is even more dramatic:
TOTAL RETURN ANNUAL RETURN
------------------------- --------------------------
2 yrs 5 yrs 7 yrs 2 yrs 5 yrs 7 yrs
----- ----- ----- ----- ----- -----
Thermo Instruments 43% 340% 542% 19.4% 34.4% 30.4%
Hewlett-Packard 122% 283% 232% 48.9% 30.8% 18.7%
S&P Electronic Instruments 105% 251% 212% 43.0% 28.5% 17.6%
Varian Associates 113% 245% 305% 46.0% 28.1% 22.1%
Dionex 48% 126% 69% 21.7% 17.8% 7.8%
S&P 500 33% 83% 157% 15.1% 12.9% 14.4%
Perkin-Elmer 8% 70% 78% 3.9% 11.2% 8.6%
Over the years, Perkin-Elmer has endured frequent
restructurings, but these actions missed the core issue: Perkin-Elmer needed a
substantial, fundamental change in its productivity levels, and a
performance-driven management culture. We share Mr. Gaynor Kelly's view that
Perkin-Elmer's Analytical Instruments business should earn operating margins of
at least 10%, and Life Sciences in excess of 15%. The failure to deliver these
results, after years of promises, makes it imperative to act decisively now,
before a new CEO is hired.
ANALYTICAL INSTRUMENTS
The instruments business is mature, with slow growth and few
opportunities for profitable internal investment. As the market leader in
several sectors, AI should also be the leader in profitability. A successful
strategy for managing an industry's post-growth phase is not difficult to lay
out:
. Improve sales and service productivity
. Reduce R&D and capital expenditures
. Maximize cash flow and minimize capital costs
. "Eat or be eaten"
3
The last point is key. A mature industry will consolidate.
Either lead the charge, or be prepared for the stampede. For example, look at
Thermo Instrument's recent acquisition activity:
DATE SELLER DESCRIPTION PRICE
---- ------------------------ ------------------------------------------- -------
pending Fisons Scientific Instruments Division $320MM
5/95 Gould Instrument Systems oscilloscopes & data acquisition instruments $25MM
1/95 Imo Industries Baird Analytical Division $12.3MM
9/94 IRT Corp. X-ray inspection systems $7.3MM
3/94 Baker Hughes EnviroTech Measurements & Controls $90MM
1994 various $11MM
2/93 Spectra-Physics Analytical liquid chromatography & cap. electrophoresis $67MM
anal. instruments
1993 various $36MM
8/92 Nicolet Instruments analytical test & biomedical instruments $179MM
5/92 Gas Tech worker safety instruments; gas detection $28MM
& monitoring systems
5/90 Finnigan industrial & scientific instruments $110MM
1/90 Thermo Environmental testing, nuclear health physics, 4,662,000 shares
environmental services (approx. $75MM)
4/89 Milton Roy LDC Analytical (liquid chromatography) $21MM
4/89 Andrews & Clark infrastructure engineering services $2.2MM
4/89 N.H. Bettigole infrastructure engineering services $2.1MM
1988 Xetex; Reactor Experiments nuclear radiation monitoring $2.5MM
"Eat or be eaten". Over the last 7 years, Thermo Instruments
has had a total return almost 7X that of Perkin-Elmer's; their 1994 operating
margin was 14.8%. Thermo Instruments' management, and their Board, have
focused on maximizing the returns to their shareholders. They have been
strategically proactive, and they have been successful.
Responding to earnings pressures by disposing of $200 million+
of unprofitable product lines is not an optimal solution. Even a strategic
buyer, could one be found, would not value these mediocre revenues very highly.
The minimal capital that such sales would free up, and the marginal costs they
would eliminate, will add little value to the business. The result would be a
smaller revenue base and lower employee morale, with no significant cash gain;
a process that would be repeated a year or two later when operations remained
dismal.
Instead, admit that reversing AI's low profitability demands
massive structural changes, not surgical removal of a few weak products. The
key to being the successful #1 competitor is to consolidate the industry's
revenue base while maintaining, or increasing, margins. This requires the
discipline to absorb other operations while cutting costs and improving
productivity, while minimizing capital costs by judicious positioning in the
capital markets. Before AI can lead consolidation, it has to improve sales and
service productivity, and be restructured to minimize capital costs. An
acceptable target would be 10% operating margins, although management should
aim-and could produce-even higher, as Thermo Electron has.
4
LIFE SCIENCES
Perkin-Elmer's acquisition of Applied Biosystems gave it a
significantly dominant position in a high-growth industry that requires ongoing
long-term investments in R&D. With its strong PCR patents, this business is
unlikely to be jeopardized. Aggressively run, Life Sciences will remain on the
technological leading edge, returning 15%+ operating margins and growing at
least as fast as the industry's 15-20%+. Over time, recurring revenues from
high-margin reagents and other consumables - presently about 40-50% of sales -
will add stability and margin expansion to Life Sciences' total revenues. With
earnings growth exceeding revenue growth, Life Sciences stock on its own would
command a multiple higher than its secular earnings growth rate.
RECOMMENDATION
There are few advantages to keeping these two disparate
businesses together under one corporate roof. One requires thoughtful
cost-cutting and strategic industry consolidation; the other aggressive growth
and well-managed investment. There are only minor cost-savings from joint use
of offices (not an insurmountable issue - note that AT&T and the Baby Bells are
still sharing facilities), but the conflicting demands are a management
distraction.
We suggest spinning off the Life Sciences business, tax-free,
to shareholders, and recapitalizing the Analytical Instruments
business.
BENEFITS
. Segmenting the capital markets allows each company to pursue
its appropriate strategy at the lowest possible cost-
of-capital.
. Demand for each company's shares will increase and the price
will rise. Value will be created.
WHY SEGMENT THE CAPITAL MARKETS?
. As a stand-alone operation unburdened by the low-growth
concerns clouding AI, Life Sciences can present itself to the
markets as the strongest participant in a high-growth
industry. Increasing reagent sales will reduce earnings
volatility and improve revenue visibility, while providing
margin expansion. This results in steady growth higher than
the industry's, earning Life Sciences' stock a multiple higher
than the industry's growth rate.
This high-multiple stock would be a low-cost currency for the
company to use for acquisitions and attracting management
talent, actions that will reinforce the company's
above-industry growth.
5
. Because it participates in a low-growth industry, AI needs
cash flow both for acquisitions and to return to shareholders.
As an independent entity unburdened by the needs of
cash-guzzling Life Sciences, AI can approach the markets to
replace 30-50% of its expensive equity capital with less
expensive debt. The short-term burden of increased fixed
charges provides immediate encouragement for management to
maximize internal efficiency and productivity and focus
critically on improving cash flow.
When operations have improved, AI's cash flow will be strongly
positive and its earnings spread over a smaller equity base.
With cash, AI can acquire other business that leverage its
distribution system, and be proactive in consolidating the
industry. Over time, its role as industry leader with
significant share and cash-generating, profitable operations
is reinforced.
WHY WOULD DEMAND FOR SHARES INCREASE?
. IMPROVED WALL STREET COVERAGE. Perkin-Elmer is presently
under-followed by Wall Street sell-side analysts, because with
two unrelated businesses it does not fit into their industry
specialties. On the other hand, there are many analysts who
specialize in instruments, or in medical technology, and they
will initiate coverage, write reports, and make
recommendations soon after Perkin-Elmer begins trading as two
companies. This will increase demand for each company's
shares.
. BUY-SIDE SEGMENTATION. "Growth investors with an interest in
the life sciences are discouraged by the mature and
slow-growing instruments business, while "value" investors are
hesitant to invest in emerging and high-priced technologies.
By splitting, each stock is able to interest a greater number
of investors, increasing market demand.
WHEN WILL VALUE BE CREATED?
. SHORT-TERM VALUATION. A split will result in some immediate
valuation improvement as investors "discount to the present"
the improved future prospects of the two companies. With each
newly independent operation having found its lowest-cost
position in the capital markets, and with appropriate analysts
and investors focused on the particular businesses that
interest them, and with managements that are single-mindedly
committed to the success of a more homogenous business, the
earnings and growth potential for each operation is greater
than it was when they were entwined. Value is created the
moment a split is announced. In fact, Perkin-Elmer stock has
recently risen from 29 to 33, just on the market's assumption
that "something is happening".
6
. LONG-TERM VALUATION. Especially exciting is the increased
earnings prospects, and commensurate market valuations, of the
independent businesses over time. Here, the impact of the
segmented capital markets roles is greatest. Over time, Life
Sciences would be able to maintain its above-industry growth
rate for a little bit longer, its high-multiple stock
facilitating a number of strategic and niche-filling
acquisitions. Likewise, AI's role as industry consolidator
wouldn't waver, because each purchase would be brought quickly
into the organization, its costs reduced, and cash flow would
emerge even higher. Over the perspective of three or more
years, each operation would grow more than it could have under
the joint Perkin-Elmer roof; each operation would have lower
capital costs to finance its investments, and each business
would be supported by an investment community that is focused
and committed.
Perkin-Elmer is at a critical junction. The appointment of a
CEO, and the strategic decision about the company's best financial and
operational structure, must not be made in isolation. As shareholders, we have
been patient but we have not been rewarded. The Board must not allow this
great opportunity to pass. We ask you to hear us, to represent us, and to do
what is best for all shareholders of Perkin-Elmer.
Sincerely,
Purnendu Chatterjee