Bendix Corp. Chairman William Agee opened negotiations today with officials of Martin Marietta Corp. in an effort to settle the protracted takeover battle between the two companies, sources said tonight.
Few details were available of the talks, which were being held at Marietta headquarters in Bethesda. It was not known who had initiated the negotiations, but Agee has repeatedly asked Martin Marietta officials to talk over the issues in the month-long battle.
Bendix bought 70 percent of Martin Marietta last week, but has not yet taken formal control of the company.
Martin Marietta is scheduled to start buying Bendix stock under its $1.5 billion offer after midnight Wednesday. Indications are that Martin Marietta will get at least 50 percent of Bendix's stock, putting the two companies in the unusual position of owning majority stakes in each other. The dispute would then likely be settled in the courts.
Agee's negotiations with Martin Marietta began on a day when Bendix received an apparent major setback on one of the battle's many legal fronts. A federal district court judge in Baltimore indicated that he would deny Bendix's request to stop Martin Marietta from buying its stock.
Meanwhile, Bendix postponed for the second time in as many days a special shareholders meeting it had scheduled to vote on changes in its corporate charter that would deter a takeover by Martin Marietta or its ally, United Technologies Corp. Bendix, citing several unresolved legal cases concerning shareholder voting at the meeting, postponed it to Monday from Wednesday. Earlier in the day, the Delaware Supreme Court upheld a lower court ruling that Bendix could go ahead with its special stockholders' meeting Wednesday.
In New York, meanwhile, a federal appeals court upheld a lower court ruling that Citibank, trustee of the 23 percent of Bendix stock held by the employes' stock option plan, could not withdraw its pledge of those shares to Martin Marietta unless instructed to do so by individual stockholders. Control of those shares could be a key to Martin's bid to take over Bendix, and a defeat in the court case could have been fatal to Marietta.
In testimony in the Delaware court, Bendix said it had obtained Martin Marietta documents indicating that Marietta plans to sell $1 billion in assets if the companies are combined, possibly including Marietta's cement, chemicals, and sand and gravel divisions, and Bendix' auto parts and machine tool operations.
U.S. District Court Judge Joseph Young in Baltimore said he "intended to deny" Bendix's attempt to get the court to block Martin Marietta's offer. Young is to rule on the case Wednesday.
Young's comments followed arguments in the case in which Bendix attempted to show that Martin Marietta directors and management would ruin their company financially if they went ahead with plans to pay $900 million for 11.9 million shares of Bendix stock -- 50.3 percent of the total amount -- and then swap Martin Marietta stock for the rest.
Marietta's lawyers, in turn, argued that the company was acting responsibly and in good faith in proceeding with its counter offer to Bendix.
Bendix contended that Martin Marietta's board is obligated to follow the wishes of its majority shareholder, Bendix. "It stands to reason that there should be a fiduciary responsibility, if not a greater fiduciary responsibility, to the majority shareholder," Alex Sussman, a Bendix attorney, told the court. "For Martin Marietta to proceed with this tender offer would be in gross violation of obligations both to Bendix, its majority shareholder, and to . . . all shareholders."
Sussman cited a study done by Salomon Bros., Bendix' investment banker, contending that if Martin Marietta took over Bendix, the combined companies' book value, dividends, and earnings per share would be substantially lower than if Bendix took over Marietta. And the size of Marietta's debt if it acquired Bendix, he said, would be "likely to result in the need to totally reorganize, if not emasculate, the new company."
But George Beall, Martin Marietta's lawyer, said the plan was only one of several being considered to help pay for the merger. And he derided the Salomon Bros. study as the "$4 million affidavit" because of the contingency fee Salomon Bros. will get if Bendix successfully completes its takeover of Martin Marietta.