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COOPER's $25 MIL. AVEENO/RHULI DERMATOLOGICAL BUSINESS FOR SALE

Executive Summary

COOPER's $25 MIL. AVEENO/RHULI DERMATOLOGICAL BUSINESS FOR SALE if the company goes ahead with its liquidation plans announced in a May 16 press release. Cooper said that its board of directors has called for a special stockholder meeting tentatively scheduled for June 29 to approve both the sale of Oral-B Labs to Gillette ("The Pink Sheet" April 9, p. 3) and "a plan to distribute its remaining assets, including cash and/or securities to stockholders within one year following the stockholder's meeting." Cooper's dermatological business includes CooperCare's Aveeno line of soaps and bath treatments, which had sales of approximately $20 mil. in FY 1983 (ended Oct. 31), and the recently acquired Rhuli OTC analgesic/anesthetic line. Cooper purchased the Rhuli products from Lederle in March for roughly $1 mil. plus royalties over the next 10 years. In addition to the skin care business, Cooper may also be putting up for auction its Cooper Biomedical and Lasersonics businesses which contributed $51 mil. and $43 mil. in sales, respectively, during FY 1983. Cooper has estimated that Lasersonics sales could grow to $60 mil. and Cooper Biomedical sales increase to $85 mil. this year. Cooper's remaining business after the Oral-B divestiture could have roughly $180 mil. in sales during the current fiscal year. If the liquidation goes through, it will cap Cooper's "Operation Supernova," described in the company's most recent annual report as a strategy for spinning off its various divisions. In the past year and a half, Cooper has spun off 18% of its former CooperVision shares to Cooper shareholders in a tax-free transaction last December; taken public 16% of Cooper Biomedical, raising $27 mil.; and announced the sale of its Oral-B business to Gillette. Cooper shareholders picked up another bonus last month, when Nestle's Alcon division offered $500 mil for CooperVision ("The Pink Sheet" April 30, T&G-6). The Palo Alto, Calif.-based firm may feel in the future that it can get more for its various operations via a "tag-sale" approach than it could by establishing the different businesses as separate entities through the public offering route. However, at present, the company said it considers a spinoff of its remaining 84% interest in Cooper Biomedical and 100% interest in Lasersonics to be more favorable to shareholders than selling those businesses outright. The resolutions for approving the Oral-B divestiture and liquidation of Cooper Labs' assets are apparently being presented to shareholders as a package in order to avoid paying taxes on the gain from the $188.5 mil. sales of Oral-B Labs. The release notes that "the proposed distribution would be implemented pursuant to Sec. 337 of the Internal Revenue Code under which the company recognizes no gain or loss from the sale of any of its assets within 12 months after the date the plan is approved by the stockholders." Cooper's approach to generating growth for shareholder investments has won converts. Three shareholder groups in the past week announced in separate 13-D filings with the Securities & Exchange Commission holdings of 10%, 8.4% and 5.05% of Cooper stock "for investment purposes."

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