Simmons May Ask Court to Kill Lockheed Poison Pill

Harold C. Simmons, the Texas financier attempting to take control of Lockheed Corp., on Thursday condemned the aerospace firm’s “poison pill” provision and indicated that he might challenge the anti-takeover defense in court if shareholders refuse to eliminate it.

Simmons is waging a proxy battle to replace the current Lockheed board with a rival slate that he leads, a challenge that was officially launched Feb. 21. Simmons controls NL Industries, a Houston chemical company that owns 18.9% of Lockheed stock.

Lockheed’s poison pill takeover defense is triggered when an investor acquires 20% or more of Lockheed’s shares. At that point, the company can effectively reduce that 20% stake by selling additional stock to all other shareholders at a discount. Simmons, in an SEC filing Feb. 23, said he would ask Lockheed shareholders to eliminate the poison pill when he seeks support for his board slate at the Calabasas company’s March 29 annual meeting.

In his first interview since launching his challenge to the board, Simmons said Thursday that he opposes all poison pills and called such provisions “an obstruction to the free operation of the marketplace.”

Simmons noted that he acquired NL Industries in 1986 after successfully challenging in court that company’s poison pill. A judge ruled the defense illegal, saying it discriminated against Simmons in violation of the law in New Jersey, where NL Industries was incorporated.

There is no direct analogy to Lockheed’s defense because Lockheed is incorporated under different laws in Delaware.

Asked about a possible court challenge to the Lockheed defense, the investor said: “I’m not saying we won’t try to get rid of Lockheed’s poison pill. However, I would like (Lockheed) shareholders to address this” (first).

Lockheed executives have said that the poison pill takeover defense is designed to force suitors to offer to buy all shares of Lockheed at a fair price. They have said the provision is designed to prevent a shareholder from gaining control by gradually buying Lockheed stock until a 51% stake is obtained.

In other developments, a nonprofit shareholders rights group said Thursday that it has filed a complaint against Lockheed with the Securities and Exchange Commission, contending that the firm’s poison pill prevents shareholders from receiving and evaluating offers for their stock. The group, the Washington-based United Shareholders Assn., said it also opposes Lockheed’s plans to spend $8 million on its campaign to counter Simmons’ challenge.

Lockheed had no immediate comment on Simmons’ remarks or on the shareholder group’s complaint.