Henley to File Amended SFSP Suit : Hostile Suitor Fights Takeover Defense, Boosts Holdings
Promising to press on with its increasingly bitter fight to take control of Santa Fe Southern Pacific, Henley Group said Tuesday that it will file an amended lawsuit this week charging that SFSP illegally “manipulated” the terms of its “poison pill” anti-takeover defense to foil Henley’s advances.
La Jolla-based Henley, which last month announced plans to begin a proxy fight to elect an alternative slate of SFSP directors, also disclosed that it has increased its holdings in SFSP shares to 15.67% of the total outstanding, up from the 14.96% previously held. Henley said it bought the bulk of the 1.2 million additional shares on Monday and Tuesday.
Henley said it will take the court action in response to SFSP’s changes in a so-called flip-in provision of its poison pill anti-takeover defense. In December, SFSP amended its defense to prohibit investors or groups of investors from accumulating more than 20% of SFSP stock by specifying that such an accumulation would trigger a stock purchase rights plan enabling all other shareholders to double their SFSP stock holdings at 50% discounts.
The provision kept Henley from holding talks with Olympia & York Developments about joining forces to offer an alternative slate of SFSP directors.
Suit Filed
Combining Henley’s holdings with those of Olympia & York, a Toronto-based energy and real estate development company that owns 10.15% of SFSP’s shares, would have created a group controlling more than 25% of the shares.
Henley filed suit in a Delaware court last month asking a judge for a preliminary injunction nullifying the effect of the flip-in provision.
But, in a surprise move earlier this week, SFSP rescinded the flip-in provision after naming two Olympia & York Development executives to its board, apparently neutralizing a potential foe .
“As soon as (SFSP) cuts a deal with Olympia & York, they change the rules and say, ‘Now you can talk to them’,” said one Henley source who asked not to be identified. “In our judgment, that just can’t be right.”
In a prepared statement, Henley Chairman Michael Dingman said Tuesday that Henley would not let SFSP “management get away with its illegal and economically harmful conduct.”
Henley officials declined to discuss what remedy their amended complaint might seek from the Delaware court. SFSP officials were not available for comment late Tuesday.
SFSP stock closed at $45.25 a share Tuesday on the New York Stock Exchange, up $1.625; Henley closed at $20.875 in over-the-counter trading, up 25 cents.
