Ocean Spray Involved in Proxy Fight

FEBRUARY, 2004 — The Committee for a Strong Ocean Spray (CSOS) has announced in a letter to Ocean Spray growers that they have submitted more than the necessary number of shares of common stock to the board to have a vote on whether to downsize the board from twelve to eleven members. If the downsizing of the board is approved, there would be a new election for eleven board members. This is the same tactic the current board used to replace the previous board.

The basic story is simple in one way and complex in another. It depends how much background is included. The simple story is that about half the growers that make up the cooperative believe that Ocean Spray can and should compete as an independent company in the “juice wars” now dominated by superpowers Coke and Pepsi. These growers, now called the Committee for a Strong Ocean Spray (CSOS) are loath to give up control of their company.

The other half, those supporting the current board, believe that in order for the company, and of course, its grower-owners, to be viable now that Coke and Pepsi are very much in the juice business is for Ocean Spray to give up control for the capital needed to market, regain single-serve distribution (lost when the Pepsi contract ended), open more international markets, etc. This could be in the form of an arrangement with a company like Pepsi, or one with a venture capital company like Vestar (which has submitted a proposal). Another much larger and more well-known venture capital company is also interested in a deal with Ocean Spray.

In order to block the pursuit of anything but a go-it-alone plan, the CSOS group plans to throw out the current board. This group is dominated by large growers from New Jersey and Wisconsin, many of whom are former board members and a number of whom were deposed in the last proxy fight.

They are going for an all or nothing solution now. The current board has already decided to increase the number of board members from 12 to 18, which will add at least four members who are powers in the CSOS group, and who were on the board before. This means that the current board would maintain a voting majority at least until the next annual meeting.

Read the full letter from the Committee for a Strong Ocean Spray at: http://www.cranberrystressline.com/csos_012804.html. Also, read the letter from the Ocean Spray board to the grower-owners: http://www.cranberrystressline.com/os_012804.html.

For more information about this situation and other News and Opinion about the Cranberry Industry, visit Hal Brown’s Cranberry Stressline at http://www.cranberrystressline.com.