The blue ribbon panel of experts charged by Congress and the Securities and Exchange Commission with reviewing the tender-offer process held its first meeting yesterday amid predictible confusion over its mandate. The task force is headed by Dean LeBaron, president of Batterymarch Financial Management of New York.
Some of the 16 members--who represent both bidders and targets in Wall Street's favorite game as well as their coaches and referees--thought the discussion should focus on the broad issue of whether the recent rash of takeovers is good for the economy in general and shareholders in particular. A few questioned the entire regulatory system and pleaded with the group not to get involved in minutiae, while others called for suggestions for improving the present system. In the end, subcommittees were appointed to deal with the topics separately.
To kick off the discussion, Martin Lipton, a lawyer involved in a number of takeovers, raised the issue of fair treatment of shareholders as opposed to the encouragement of innovation and acquisition techniques, and the encouragement or discouragement of concentration of power versus free-market forces. Broad policy questions aside, the meeting to set the agenda gave an indication of some of the controversial regulations that will be discussed before the panel makes its report next July.
For example, allowing shareholders 30 or 60 days to make up their minds on a tender offer may be good for them, Lipton remarked, but it also may tip the balance substantially in favor of the target companies. The delay may deter bidders from making offers, because the more time shareholders have to decide, the more time management has to find a "white knight," or friendly acquirer, or to take other defensive measures.
Delaying the takeover also makes it more expensive, said Joseph H. Flom, an attorney who has been active in takeovers for two years.