The acquisition of Florida Gas Company by The Continental Group
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On August 28, 1979 1 the shareholders of Florida Gas Company approved an Agreement and Plan of Merger with The Continental Group, Inc. The acquisition of Florida Gas was the last step in a decade-long strategy initiated by Continental in the early 1970s. The Continental Group, Inc. began as Continental Can Company in 1904 with a small can plant in New York. Continental established its leadership in the canning industry and began to diversify into other forms of packaging. However, the company was still a concentrated canning concern in 1970, with more than 70 percent of earnings contributed by the can manufacturing operations and over half the company's total assets employed by this function. Today Continental is a diversified packaging company with substantial business interests in energy, natural resources, and financial services. Continental's operations are worldwide and are conducted through five operating groups: Continental Can Company, Continental Diversified Businesses, Continental Forest Industries, Continental Financial Services, and Continental Resources Company. The dramatic changes in the composition of Continental's contributions to earnings and assets and the much more diversified nature of its operations are the results of a strategy that was initiated in the early years of the seventies. The strategy was designed and implemented with the goal of positioning the company for the eighties to take advantage of new opportunities for growth and to adjust to a maturing domestic can market by diversifying and achieving more balanced operations. Prior to the acquisition by Continental, Florida Gas Company was a Florida corporation engaged in natural gas transmission, oil and gas exploration and development, hydrocarbons extraction, and real estate development. These operations were conducted by four wholly-owned subsidiaries. Early rumors of the possible acquisition of Florida Gas Company began to surface in March 1979, and on May 22, 1979, Florida Gas and Continental announced an agreement in principle. Subsequent to the approval of the Boards of Directors of both companies, the shareholders of Florida Gas approved the merger on August 28, 1979. The terms of the agreement provided that Florida Gas Company would be renamed Continental Resources Company and operate as a subsidiary of The Continental Group. The transaction was valued at $350 million, and each shareholder of Florida Gas received a $50 package of cash and Continental preferred stock per share of Florida Gas Common Stock. Substantial growth in the operations of Continental Resources Company, especially in oil and gas exploration and development, contributed to the earnings of The Continental Group in 1980 and were expected to be important in the future growth and profitability of Continental Group. The acquisition was concluded to have been a very advantageous investment for Continental Group as the company prepared to meet the challenges of the eighties. Continental had successfully implemented its decade-long strategy, and the acquisition of Florida Gas Company played a major role in providing diversification and growth potential for the New Continental--a company vastly different from Continental Can Company of 1970.