In their long-running battle with family-controlled Farmer Bros. Co., outside shareholders have opened a new and unusual front. They're attempting to line up a sale of the Torrance-based coffee distributor on their own, without management's involvement or its sanction.

Such an effort is a long-shot, at best. But that isn't stopping Gary Lutin, a New York investment banker who has facilitated an online forum for Farmer Bros. shareholders for several years.

"We've given up on the board doing its job and therefore shareholders have taken the initiative to negotiate the required alternatives," said Lutin, president of the investment firm Lutin & Co. "You simply need someone else to assume responsibility for the company. It's feasible."

Also unlikely. With Farmer Bros. continuing to lose market share to more nimble competitors, its stock has fallen below $20, a level not seen since early 2001. Now it's questionable whether anyone would even offer to buy the company at the $30 to $35 per share that Lutin would like to see.

Then there's the opposition likely to emanate from the Farmer family, which owns 39.5 percent of the stock. (An employee stock ownership program that sides with management owns another 20 percent.)

"In a second- or third-generation business like Farmer Bros., there are typically family members who aren't tuned in to the marketplace and believe that the company can resurge," said analyst Stephen Pettisse at Golden Spike Resources Group in Westwood. "Given that situation, finding somebody who can financially take the family out for what the family thinks the company is worth is definitely a long-shot."

Last month, Lutin notified Farmers shareholders that, "since there are no indications that current management will either improve performance," he was organizing a program "to explore and negotiate" strategic alternatives for Farmer Bros. He invited interested shareholders to join in if they were willing to respect required confidentiality conditions.

Farmer Bros. officials would not comment, but spokesman Jim Lucas said that the board has a fiduciary duty to consider any proposal and must explain why it would reject an offer.

In practical terms, it's unlikely that Lutin's group will come up with an offer that management would accept, so any prospective buyer would have to be pursue a hostile deal.

Longtime Chairman and Chief Executive Roy F. Farmer beat back numerous attempts at shareholder activism before his death in March 2003. His son, Roy E. Farmer, then took over and continued in a similar vein until he killed himself in January. Since then, Guenter Berger, a 44-year Farmer Bros. employee who was vice president of production since 1990 has been at the helm.


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