Lockheed’s ‘Poison Pill’ Strengthened as Investor Buys Shares

Lockheed Corp. said today it had buttressed its takeover defenses following disclosure that Dallas investor Harold C. Simmons intended to boost his holdings in the aerospace firm.

Lockheed spokesman Bob Slayman refused to say if the changes in a 2-year-old “poison pill” shareholder rights plan was a direct response to Simmons’ move. Nor would he reveal if Lockheed, the builder of the stealth fighter and other military hardware, had discussed the investment with Simmons.

Simmons did not immediately respond to a telephone request for comment.

According to Lockheed, Simmons’ Valhi Inc. filed notice under the Hart-Scott-Rodino Act that he intended to boost his Lockheed stake beyond $15 million, the trigger point for the act’s disclosure provisions.

As of the Dec. 7 filing, Valhi said it owned 375,000 of Lockheed’s 59.5 million outstanding shares, or 0.63%.

A Lockheed board vote to tighten the firm’s takeover defenses was taken Thursday, two weeks after the filing, Slayman said.

“The amendment is intended to heighten the protection afforded shareholders against abusive takeover tactics,” the company said in a news release.

Discount Option

The revised plan allows present shareholders to buy newly issued stock at a discount if an outsider buys 20% or more of the common stock. Those rights can be canceled if the independent directors determine the takeover bid is in the best interest of shareholders or if the company cancels the rights within 10 days of the time outside holdings reach 20%.

Such “poison pill” plans are intended to dilute the holdings of a potential buyer, making a takeover prohibitively expensive.

Lockheed has 88,000 employees in California, Georgia, New Jersey, Texas and New Hampshire.