M&A Roundup: Takeover Defences – Pill Foes Claim Some Victories

Institutional investors and other vociferous opponents of poison pills scored some key points in their battle to rid public companies’ capital structures of the detested antitakeover defense during late 1999. Yet, the ranks of firms installing new shareholders rights plans swamped the relative handful that either backed away from their pills entirely or loosened their restrictions. Designs Inc. directors voted to kill their pill after shareholders approved a resolution calling for its recission. Mylan Laboratories and Quality Systems scuttled their pills and Sames Corp. decided not to renew its expiring rights plan. In a rather unusual public disclosure, Oregon Steel Mills disclosed that its board had decided not to adopt a pill. Two other large companies – Lubrizol and Genuine Parts – kept or renewed pills but dropped controversial and legally challenged “dead-hand” provisions that permit redemption of the pills only by the directors that originally voted them in. But these actions did little or nothing to dampen the ardor for installing new plans – perhaps in response to the growing contentiousness and increased incidence of hostile bids in the m&a market. Among the companies voting in pills in late 1999 were: Abbott Laboratories; ACT Teleconferencing; AgriBioTech; Allied Products; American Power Conversion; Apex Mortgage Capital; ARC Inter-national; Aronex Pharmaceuticals; Aviation Sales; Avista Corp.; Michael Baker; Bemis Co.; Brown & Brown; Cade Industries; Capital Environ-mental; Captec Net Lease Realty; Chesapeake Utilities; CK Witco; Commercial Metals; Communications Systems; Concentric Network; Cone Mills; Cronos Group; and Culp Inc. Also: Daisytek International; Dallas Semiconductor; Display Technologies; Elder Trust; EndoSonics; Gold Banc; Golf Trust of America; GREKA Energy; Group 1 Software; Hallwood Energy Partners; John H. Harland; Hollis-Eden Pharmaceutical; Interstate Bakeries; InterTan; Iomega; K2 Inc.; Kendle International; Laser Power; MacroChem; Meadowbrook Insurance Group; and MGIC Investment. Also: Network Equipment Techno-logies; New Brunswick Scientific; Nieman Marcus Group; North Valley Bancorp; Onyx Software; Packaged Ice; Quintiles Transnational; Russell Corp.; Safety-Kleen; Simpson Manufacturing; Skymall Inc.; St. Mary Land & Explo-ration; Stewart Enterprises; TCF Financial; Trojan Technologies; United Stationers; Valassis Communications; Warnaco Group; Whitman Corp.; and WIC Inc. In addition, at least two newly independent companies – Lanier Worldwide, spun off by Harris Corp., and Tenneco Packaging, spun off by Tenneco Inc. – emerged with pills in their capital structures. Badger Meter established a super-voting class of common stock, Class B, which packs 10 votes per share.