Fairness to shareholders invoked; Tighter rules asked for the takeover game
The language surrounding corporate takeovers often sounds as if it belongs in a video game or James Bond movie. When chief executives bid billions of dollars for control of rival companies, the air is filled with references to poison pills, golden parachutes, greenmail, shark repellent, and the Pac-Man defense.
The complex maneuvers described by these colorful terms are sometimes confusing even to those who speak the specialized language of takeovers. The deals can be baffling to individual shareholders asked to sell a small stake in a publicly traded company.
In the wake of criticism surrounding last autumn's especially messy four-way takeover battle involving the Bendix Corporation, Allied Corporation, Martin Marietta Corporation, and United Technologies Corporation, the Securities and Exchange Commission (SEC) named an 18-member advisory panel. The group's assignment was to study takeovers and suggest changes in the laws and regulations that govern them.
Last week the panel issued its final report, which included 50 recommendations for the commission. ''We concentrated our work and recommendations on shareholders' interests,'' notes Dean LeBaron, chairman of the SEC'S Advisory Committee on Tender Offers. Mr. LeBaron is president of Batterymarch Financial Management, a Boston-based portfolio management firm.
Key recommendations include:
* Tightening the rules for disclosing when a company has purchased more than 5 percent of another company's stock. This is to control an acquirer's ability to amass a large block of stock secretly.
* Limiting the methods a company can use to acquire more than 20 percent of a target. This is to ensure that all stockholders get a share of any premium paid for control of a company.