McGraw-Hill Inc. has intensified its legal assault on the takeover bid by American Express Co.
The publishing giant yesterday asked the federal court in New York to require American Express to end its merger bid and formally asked the Federal Communications Commission to either delay the merger attempt or block it. McGraw-Hill owns four television stations.
McGraw-Hill, which publishes Business Week magazine and runs Standard & Poor's financial rating service, among other things, has vehemently opposed what American Express had hoped would be a friendly, $880 million takeover.
McGraw-Hill's request to the U.S. District Court for the Southern District of New York came in response to a suit American Express filed last week charging the publishing company with libelling the credit card concern and violating securities laws in its attempt to block the takeover bid.
McGraw-Hill made a similar request of the New York Supreme Court last week.
The publishing company alleges that American Express President Roger H. Morley violated his fiduciary responsibility to McGraw-Hill and its stockholders by serving as a member of McGraw-Hill's board at the same time his company was secretly planning to take over McGraw-Hill.
Tuesday, the New York State Supreme Court directed Morely to appear to demonstrate why the court shold not stop Morley and American Express from making use of any of the confidential information he learned while serving as a McGraw-Hill director.
American Express has conceded that Morely had access to confidential McGraw-Hill information but that the company made no use of that information in deciding to try to take over the publishing company.
Morely resigned from McGraw-Hill's board after the merger bid was made public.
American Express -- which has a large credit card and traveler's check operation, as well as a giant insurance company and a foreign bank -- has offered to pay $34 a share for all McGraw-Hill stock.
But American Express cannot make a formal proposal to stockholders until it gets clearance from a number of state and federal agencies including the New York attorney general, the Securities and Exchange Commission, the FCC and the Federal Trade Commission.
In a formal petition to the Federal Communications Commission yesterday, McGraw-Hill said the agency should not permit the takeover bid until it can determine the disposition of the four television stations McGraw-Hill owns.
Last week, American Express told the FCC that it would comply with federal communications laws and asked the agency not to block the tender offer.
Although the credit card company did not specify what steps it would take, sources said the company is exploring with the FCC whether the television stations might be put in a trusteeship pending a final FCC decision on whether they can be transferred to American Express.
If the FCC did not approve American Express' application for a broadcasting license, then the stations could be sold to an acceptable owner. The FCC, however, has never approved a trustee arrangement in a hostile takeover.
The battle between McGraw-Hill and American Express has been one of the betterest takeover attempts in modern corporate history.
McGraw-Hill has argued that the integrity of its publishing operations is at stake, that the corporate integrity of American Express is questionable and that American Express' banking operations in the Middle East make it subject to pressures that could interfere with McGraw-Hill's public service operations.
McGraw-Hill is also trving to get American Express defined as a bank holding company -- the company has foreign but no domestic banking operations -- which would preclude it from owning McGraw-Hill.
If McGraw-Hill succeeded, American Express would have the option of getting out of the banking business, which accounts for about 10 percent of its earnings.