Investor Interest Prompts New Lockheed Defenses
Lockheed disclosed Friday that Dallas investor Harold C. Simmons is preparing to accumulate its shares, spurring the aerospace firm to bolster its takeover defenses.
Simmons, acting through his Valhi industrial firm, filed notice under federal securities law earlier this month that he owns 0.63% of Lockheed’s outstanding common shares, worth about $15 million, and may increase his holdings after a statutory waiting period.
Lockheed shares rose sharply in pre-holiday trading Friday, jumping $2.75 to close at $42.75 on the New York Stock Exchange.
The Lockheed board, meeting Thursday by telephone, voted to strengthen provisions of a 1986 “poison pill” defense against what it termed “abusive takeover tactics.” The new provisions allow shareholders to buy newly issued stock at a discount if anyone buys 20% or more of the common stock, making a takeover prohibitively expensive.
Give Him Leeway
But Simmons described his accumulation of Lockheed shares as for “investment” purposes and said it was “no big deal.” In addition, securities analysts said it is unlikely that Calabasas-based Lockheed could fall prey to a corporate raider.
Simmons filed notice under the Hart-Scott-Rodino Act on Dec. 7 that he intended to boost his Lockheed stake beyond $15 million. He said Valhi owned 375,000 of Lockheed’s 59.5 million outstanding shares.
Simmons told news agencies Friday that the filing was intended to give him leeway to buy more Lockheed stock with money anticipated from the planned sale of his Amalgamated Sugar Co. to a British firm. But the $300-million deal fell through, he said.
Analysts said Simmons, though he has been involved in a number of smaller takeover battles, probably lacks the resources to make a run on Lockheed. More likely, they said, Simmons wants to “make some noise” that will run up the price of Lockheed shares so he can earn a quick profit.
Lockheed shares are among the most depressed in the aerospace industry, a group whose stocks are trading at a steep discount compared to those of other industrial sectors. Lockheed’s total market value amounts to only 21% of its annual sales, compared to 100% for many aerospace firms that have been sold in recent years.
‘Undercurrent of Concern’
But analysts said the Pentagon and Congress would be unlikely to accept a dismemberment of a key prime contractor.
“There is already an undercurrent of concern in the Pentagon that there are too many national security assets that have been shaken loose,” said Wolfgang Demisch, an analyst at UBS Securities.
Lockheed produces the F-117A stealth fighter, the Trident II missile and a variety of top-secret reconnaissance satellites, all systems that are among the most secret in the U.S. arsenal.
Lawrence A. Skantze, a retired general who was in charge of Air Force research and procurement, said: “My gut feeling is that the Defense Department would say, ‘wait a minute’ and raise objections on the basis of national security. A lot of heat could be turned up.”