A Martin Marietta Corp. shareholder filed suit yesterday seeking to block the company from going through with the settlement of its takeover battle with Allied Corp. and Bendix Corp.
The suit charges that the settlement, which leaves Allied with 38 percent of Martin Marietta stock that must be voted as directed by the Marietta board, gives the board too much power over the company's affairs.
The suit, which names Martin Marietta and its directors as defendants, seeks to nullify the settlement agreement and to enjoin the company and directors from taking steps to complete the settlement.
Martin Marietta had no immediate comment on the suit, which was filed in U.S. District Court in Baltimore by Charlotte Horowitz, who owns about 150 Martin Marietta shares.
Martin Marietta, Bendix and Allied made peace late last month after a torrid monthlong battle that saw Marietta and Bendix buy majority stakes in each other.
Allied then agreed to take over Bendix, and swapped stock with Marietta, giving Allied control of Bendix and a 38 percent share of Bethesda-based Marietta. Under a "standstill" agreement with Marietta, Allied will vote the stock for the next 10 years as desired by Marietta's board.
"We think the standstill agreement is violative of shareholder rights," said Allen Tessler, a New York attorney for Horowitz. "We think it enables the Martin Marietta directors to obtain a perpetual proxy on 38 percent of shareholder rights."
In other words, the board could count on having 38 percent of the stock voted its way--a block that could be crucial in a dispute over who runs the company, or in another takeover battle.
"An outside party must get the votes of more than 80 percent of non-Allied shares to get the change in control," Tessler said.
"That proxy has been obtained with corporate assets," he said. "In effect, the director-defendants have given themselves certain of the benefits of ownership of a majority of Martin's stock. . . . If the director-defendants want to get control of that much stock, they should buy it themselves, not with the company's money.