Fluor Will Restudy Defense Against Takeovers in Wake of Shareholder Vote : Meeting: Repeal of ‘poison pill’ plan is favored by 42%. The company hopes to divest its lead operations in Missouri by the end of the year.
Fluor Corp. will take a closer look at its “poison pill” anti-takeover defense following a surprisingly strong showing by a shareholder proposal to repeal the plan, Chief Executive Les McCraw said.
And Fluor, which announced plans last year to divest its lead operations in Missouri, hopes either to sell the operation, spin it off to shareholders or create a separate company by year’s end, McCraw said.
Nearly 42% of shareholders casting ballots at the company’s annual meeting Tuesday favored a proposal by stockholder Richard Parker to repeal Fluor’s preferred share purchase rights plan or submit it to a binding vote by shareholders.
“The fact that it did get 42% does suggest that we ought to look at it, and we will look at it,” McCraw told reporters after the meeting. “We will have a further discussion on that by the board.”
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Parker’s proposal noted that the “poison pill” was adopted by the board without shareholder participation or approval, and that the threat of unfriendly takeovers isn’t a major factor in today’s financial markets.
“Continuation of the plan without shareholder consent, I believe, is contrary to the long-term interests of all shareholders and offensive to the concepts of management accountability and corporate democracy,” the proposal said.
McCraw told shareholders the rights plan was designed only to protect stockholders’ interests in a takeover situation.
“The plan achieves this purpose by preventing abusive divide-and-conquer takeover tactics and by giving the board an opportunity to seek other offers or alternatives to maximize shareholder value,” he said.
Irvine-based Fluor, which provides engineering and construction services to a wide range of industries, and which mines coal and lead, is optimistic that it will be able to sustain earnings growth of about 15% a year at Fluor Daniel, its construction and engineering unit and principal subsidiary, McCraw said.
Fluor Daniel has sustained a compounded annual growth rate of 15% over the last five years.
“Over time, we’ll be looking at 15% plus,” he said. “While there may be a year where it drops below 15 to 12 and the next year grows to 18, that’s kind of the nature of our business. What we’ve tried to do is, through our diversification strategy of being involved in a lot of different markets, we’re trying to protect against the downside of one particular industry going sour.”
While it won’t make earnings projections on an annual basis, Fluor aims at remaining in the top 25% of U.S.-based corporations in net earnings growth, cash flow and return on shareholder equity, said James Rollans, chief financial officer.
“We tend to think of our growth in a relative term to that group, without trying to project earnings,” Rollans said.
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Fluor is conducting an extensive study to “dramatically improve” performance, particularly with regard to reducing costs and the time required to complete a project, McCraw said.
Fluor will continue to seek additional reserves for its A.T. Massey low-sulfur coal operations, he said. The company increased reserves more than 30% in 1992 to bring total reserves to nearly 1 billion tons. However, McCraw said he doesn’t expect to duplicate that action in 1993. The 1992 reserve acquisitions met a series of stringent criteria and were opportunities “too good to turn down,” he said.
Fluor continues to study alternatives for the Doe Run Co., its lead subsidiary. The company expects to decide by the end of the year whether to sell Doe Run, spin it off to shareholders or make an initial offering of stock to the public, McCraw said. Potential buyers for Doe Run have contacted Fluor, but the company hasn’t entered any negotiations to sell the business, he said.
Fluor sees significant opportunities for growth in the Asia-Pacific market and has already reached long-term contracts to upgrade refineries in the Philippines and Indonesia. The company also announced last week that it had reached a letter of intent, in a joint venture with a unit of Raytheon Co., to build a $2.2-billion Shell Oil Co. refinery in Thailand.
Specifics of the contract still are being worked out and haven’t been disclosed, McCraw said. However, the company already has begun design work on the project and expects to begin fieldwork by early next year, assuming a final contract is signed by the end of 1993, he said.
Fluor also expects significant domestic work in the future from projects similar to its $4-billion contract with the Department of Energy for the environmental cleanup of closed uranium production facilities in Fernald, Ohio, and the upgrades of refineries to meet Clean Air Act standards, company officials said.
After the annual meeting, Fluor’s board declared a quarterly dividend, continuing the amount at 12 cents per share of common stock. The dividend is payable April 13 to shareholders of record at the close of business on March 23.
