United Technologies Corp. has asked the Justice Department for a novel legally binding agreement that would lift the threat of antitrust action from the company's proposed takeover of Bendix Corp.
At a meeting on Tuesday -- the day the takeover bid was announced -- officials of United Technologies offered to accept a consent decree under which their company would sell Bendix's aircraft starter and jet-fuel controls divisions to Martin Marietta Corp. of Bethesda. The proposed consent decree was disclosed in documents filed yesterday with the Securities and Exchange Commission.
United Technologies and Martin Marietta are partners in an effort to fend off Bendix's unwelcome attempt to gain control of Martin Marietta. They have agreed that, if United Technologies succeeds in taking over Bendix, they will divide that company between them.
The agreement provides that, if United Technologies gains control of Bendix, Martin Marietta will buy the aircraft starter and fuel controls units and "other operations" of Bendix, and 1.6 million of its own shares already owned by Bendix for $600 million. United, in turn, will use that money to finance part of its proposed $900 million purchase of 11.9 million Bendix shares.
Martin Marietta, for its part, has agreed not to seek any other merger partner, or "white knight," against Bendix so long as the United Technologies offer is open, and to pay United $2.5 million for expenses if the United takeover attempt fails.
It appeared that Martin Marietta entered into the deal with United Technologies partly because of doubts that its own counteroffer to purchase Bendix could succeed, sources familiar with the company said yesterday.
Both are offering $75 a share for 11.9 million Bendix shares, but fewer Bendix shares are available to Martin Marietta. The largest block of Bendix stock, 23 percent of all its shares, is held by Bendix's employe stock option plan, which under its own rules could not make any of its shares available to be tendered by midnight tonight, the time limit set by Martin Marietta. The shares, however, can be withdrawn and tendered to United Technologies, whose purchase offer does not expire until Oct. 5, and the Bendix board is considering what to do about this, a company spokesman said.
United said its proposed agreement with the Justice Department would resolve any significant antitrust issues arising from its planned takeover of Bendix and its deal with Martin Marietta. Antitrust Division officials said they could not comment on United's request for the consent decree.
The arrangment between Martin Marietta and United Technologies is the latest twist in a complicated, three-way battle that began Aug. 26, when Bendix, an auto parts and aerospace giant based in Southfield, Mich., began an attempt to acquire Martin Marietta, offering $43 a share for up to 15.8 million Martin Marietta shares. That offer has been increased to $48.
Martin Marietta has fought the Bendix attempt on two fronts. First, it made a bid for Bendix, offering $75 a share in an attempt to gain control of that company. Then, according to the documents filed with the SEC, it approached United Technologies seeking an agreement from that company to buy parts of Bendix should Martin Marietta succeed in taking it over.
United Technologies, an industrial conglomerate based in Hartford, includes Pratt & Whitney aircraft engines and Otis Elevators. UT had $13.67 billion in revenues last year, far more than Bendix and Martin Marietta combined.