In charging this week that Fugua Industries made false and misleading statements about its takeover attempt of the Hoover Co., the Securities and Exchange Commission has again demonstrated its continued interest in the problems encountered in unconventional takeover attempts.
On Tuesday, the SEC charged that Fuqua withheld material information aoubt its takeover attempt of the company that manufactures the famous Hoover vacuum cleaner, including the fact that Fugua planned to use $40 million of Hoover's own money to cover the expenses of the takeover.
Fuqua, which on Monday withdrew its offer to purchase Hoover, consented to not violate the filing and anti-fraud requirements of the tender offer provisions of the Exchange Act in the future, without admitting or denying the SEC charges.
Fuqua, under the direction of chairman J. B. Fuqua, had offered $240 million to acquire Hoover, but had not used the traditional outlets to announce its intentions to take over the company.
Like the recent attempted takeover of Becton, Dickinson & Co. by the Sun Company, the Fuqua takeover attempt was filled with intrigue and internal dealing, frequently without the knowledge of key people.
The SEC has begun to take a harder line on such activity, staff attorneys at the agency say.
As an indication of that, they point to the conditions agreed to by Fuqua in this weeks consent order.
Fuqua agreed, for example, to appoint an acquisitions committee that must screen all future acquisition plans to determine whether or not the company would be in violation of any securities laws.
And, as part of the agreement, Fugua also agreed to appoint at least two members who are "not objectionable" to the SEC and no members who are either officers, directors or employees of Fuqua Industries.
The company is also required to report any proposed acquisition attempt that it plans to make against the wishes of the acquisition committee to the SEC before completing any such acquisition.