Thomas Pownall, 83; Executive Popularized the ‘Pac-Man Defense’

Thomas G. Pownall, who popularized the “Pac-Man defense” in business circles when he daringly used it to ward off a legendary 1982 hostile takeover of his Martin Marietta Corp., has died. He was 83.

Pownall, chief executive from 1982 to 1988 of what is now Lockheed Martin Corp., died June 24 of pneumonia near his home in Potomac, Md.

Named for a popular video game featuring a little circular icon that gobbled up its enemies, the Pac-Man defense emerged in the corporate takeover wars in the spring of 1982 with a thwarted struggle for Cities Service Co.

But the savvy, tough-as-nails Pownall perfected the technique -- in which the takeover target turns the tables and acquires the predator firm before it can be consumed itself.

What Forbes magazine described as the “comic-opera takeover battle of 1982” began that August when Bendix Corp. announced, in a letter from Chairman William M. Agee, that it had bought a majority of Martin Marietta shares and planned to buy the rest for $43 each.

“His letter announcing the tender offer was a gun at my head,” Pownall, a former Navy officer, later told Time magazine.

Pownall, who had joined Martin Marietta in 1963 but had occupied the chief executive’s chair only four months, and his board were convinced that Bendix, an electronics company, knew nothing about the operations of Martin Marietta, a Bethesda, Md.-based aerospace manufacturer.

A takeover, they decided, would be bad for business.

Audaciously, Pownall employed the Pac-Man defense by countering that his company would buy Bendix for $75 a share.

The strategy worked. Martin Marietta remained independent, while Bendix was soon taken over by Allied Corp.

Pownall demonstrated, New York takeover lawyer Dennis Hersch told The Times in 1982, that “you can use the defense, and even in the face of someone who’s already bought you, you can go out and buy them.”

The defensive maneuver spawned books, inspired the creation of courses in business schools and made Pownall something of a folk hero on Wall Street and beyond.

Adding Martin Marietta’s chairman title to his credits, Pownall quickly set about reducing the $1.3-billion debt incurred in the takeover war. Within a year -- rather than the 10 years Pownall first estimated -- Martin Marietta had bought back all its shares from Allied.

Pownall also restructured the company and spun off unprofitable operations -- cement and industrial sand, chemicals and aluminum -- and pursued more government aerospace contracts, greatly increasing Martin Marietta’s growth and profits.

The personable Pownall, who retired as chairman in 1988 but remained on the company’s board until 1991, was philosophical about the Pac-Man defense.

“We cannot be construed to have been a winner,” he told Time magazine a year after the battle, “but we have our dignity, and the character of the corporation is intact. We had a chance of being pushed over the cliff, and we are still on the cliff. It sure makes life sporty.”

Pownall harbored no hard feelings toward Agee, whom he described for the Washington Post in 1991 as “a smart fellow,” adding, “There were times when I thought we might wind up in his clutches.”

As head of aerospace projects at Martin Marietta before becoming chief executive, Pownall had supervised development of Viking spacecraft for NASA’s first expedition to Mars in 1976. This remained one of his proudest achievements.

Born Jan. 20, 1922, in Cumberland, Md., Pownall graduated from the U.S. Naval Academy in 1946.

He served as an officer until resigning his commission in 1949. He told Forbes that was “the greatest mistake I ever made.”

He maintained the military officer’s bearing throughout his life and during the 1982 hostile takeover fight sported a tie with naval pennants proclaiming, “Don’t Give Up the Ship.”

Before joining Martin Marietta, Pownall worked for the paper box industry, a steel fabricator and an automobile manufacturer.

He served as an advance man in the 1952 presidential campaign of Dwight D. Eisenhower and in the 1960 campaign of Richard M. Nixon.

Pownall is survived by his wife of 59 years, Marilyn; two daughters, Suzi Locke and Fuzzy Billings; a sister, Molly Peters; and six grandchildren.