FAMILY SPLIT ON FUTURE OF WEIS SEEN IN SEC FILING

DAVID GHITELMAN

SUNBURY, Pa. -- A family disagreement about the future direction of Weis Markets here went public last week in the form of a Securities and Exchange Commission filing.

One faction, no longer involved with the day-to-day management of the company, said Weis Markets should pursue ways of maximizing shareholder value, including a possible business combination or merger transaction.

The other faction, the current company management, says it is willing to talk with the dissidents, but insists "the company is not for sale."

The non-management faction consists of Janet C. Weis, widow of Sigfried Weis, company president from 1961 to 1994, her children and grandchildren, along with the lawyers for a family charity, the Degenstein Foundation.

This group, which controls 41% of Weis Markets' stock, said it has formed a shareholders' committee and requested the company's management to call a special shareholders' meeting to consider changes to Weis Markets' board of directors.

In the management faction, which also controls 41% of the company's stock, is Robert F. Weis, cousin to Sigfried and a long-time Weis Markets executive who has been company chairman since 1995. Robert's son, Jonathan, is also with the company, currently as vice president for property management.

The shareholders' committee last week filed a 52-page proxy statement with the Securities and Exchange Commission.

In that statement, the committee said, "Weis Markets is not sufficiently committed to exploring all reasonably available alternatives ... including considering a potential sale of Weis Markets."

The committee said it would like to add two seats to the company's board of directors. The committee also said it has hired Salomon Smith Barney, New York, to be its financial adviser. It said the investment firm estimated that Weis Markets' stock would sell for between $45 and $55 a share in the event of an acquisition.

At the beginning of last week, the stock was selling for about $35. Late last week, after the shareholders' committee had gone public with its grievances, the stock had risen to $42 a share.

Weis Markets responded to the shareholders' committee late last week in a statement that said it is negotiating to purchase the committee members' stock.

Robert Weis said, "We are disappointed that the actions of the dissident group have had a disruptive effect on the company, especially during the busiest time of the year. Our goal has been and will continue to be enhancing the value for all our shareholders.

"While our company is not for sale, we are actively working with our financial advisers, Morgan Stanley Dean Witter [New York], to study a range of alternatives."

Jonathan Ziegler, a San Francisco-based equity analyst with Deutsche Banc Alex Brown, New York, told SN that, should Weis Markets be up for sale, "There could be many interested acquirers."

Factors that could make Weis a good acquisition, according to Ziegler, include: its strategic location; its recently opened "larger, more impressive stores"; and its balance sheets.

"It's an incredibly cash-rich company," he said. "It's like a bank."

He added this could also be a good time for the company to be put on the market, before increased competition from larger companies starts cutting into Weis' sales.

"Among other things, Wal-Mart Supercenters are going up in Weis' territory," he pointed out. "Size does seem to matter in this industry."

Weis Markets was founded in 1912 by brothers Sigmund and Harry Weis. Sigfried Weis, the late husband of Janet and former company president, was Sigmund's son. Robert Weis, the current chairman, is Harry's son.