Lockheed Corp. has decided not to allow Texas investor Harold C. Simmons to appeal in person to the company's board for elimination of Lockheed's "poison pill" anti-takeover provision, it became known Tuesday.
Simmons has stepped up his opposition to Lockheed's poison pill since shareholders voted at the March 29 annual meeting in favor of a non-binding proposal calling for its elimination. Shareholders also voted then to retain Lockheed's incumbent board of directors, rejecting an opposing slate of candidates headed by Simmons.
The anti-takeover provision entitles Lockheed to sell stock to current shareholders at a discount if a hostile buyer accumulates 20% or more of the company's shares. Such a sale would reduce the relative size of the hostile buyer's stake in the Calabasas-based company.
The 20% threshold is significant because NL Industries, a Houston-based chemical company controlled by Simmons, last month raised its stake in Lockheed from 18.9% to 19.8% by buying 510,700 shares. The size of NL's stake is second only to that of Lockheed's employee stock ownership plan, which holds slightly more than 20%. The ESOP's stake is exempt from the poison-pill provisions.
Simmons wants to meet with Lockheed directors to explain his opposition to the poison pill. His request was contained in an Aug. 24 letter that NL Industries President J. Landis Martin sent to Lockheed Chairman Dan Tellep. A committee composed of some Lockheed directors has been appointed to consider the poison pill issue and make recommendations to the full board.
However, Tellep--in an Aug. 31 letter filed Tuesday with the Securities and Exchange Commission--denied the request, citing a suit filed by Simmons against Lockheed as a reason for the denial. Simmons' suit--filed April 18 in U.S. District Court in Los Angeles--seeks to void the Lockheed board election, challenging the ESOP portion of the vote because employees have not yet paid for most of their stock.