USG Corp. can use a “poison pill”...

USG Corp. can use a “poison pill” strategy in defending itself against Desert Partners LP’s hostile $1.6-billion takeover bid, U.S. District Judge James F. Holderman has ruled in refusing to grant a preliminary injunction sought by Desert Partners, a Midland, Tex.-based investor group. USG’s poison pill would make it prohibitively expensive for Desert Partners to acquire an 85% stake in the company even if shareholders tendered the 39 million shares the group is seeking. Under the plan, USG shareholders would have the right to buy a new series of preferred stock if suitors, like Desert Partners, acquire more than 20% of USG stock. Said Holderman: “Once the board decides to maintain the company’s independence, Delaware law does not require a board . . . to put their company on the auction block or assist a potential acquirer to formulate an adequate takeover bid.” USG, based in Chicago, is a leading producer of building materials.