Woodward & Lothrop Inc. shareholders might be better off if the two rival offers to buy the company fell through, a lawyer for dissident shareholders charged yesterday.
"What a wonderful situation that would be for Woodward & Lothrop," said Calvin Cobb during a federal court hearing in which he sought to block next week's scheduled shareholder meeting to vote on an offer by Michigan real-estate magnate A. Alfred Taubman to buy the company for for $59 a share.
Cobb noted that since Taubman made his bitterly contested offer in April to buy Woodies, the shopping center developer has added $104 million to the corporate treasuries by buying 1.8 million Woodies shares.
"A cash-rich company with an additional $104 million in its till won't reduce its attractiveness," Cobb said. Taubman's cash, he noted, could spark higher offers for the company than Taubman's or the $62.40 a share bid proposed by Monroe G. Milstein, chairman of Burlington Coat Factory Warehouse Corp.
As a result of that potential, Cobb contended, there would be no harm to shareholders if next week's meeting is postponed.
Lawyers for Woodies and Taubman strongly disagreed with Cobb and urged U.S. District Judge Joyce Hens Green to let the shareholders meeting go forward -- and to allow Taubman to cast all his shares in favor of his proposal.
At the very least, Taubman should be barred from voting his shares -- which amount to nearly one-third of the company's outstanding stock -- for his own merger, argued Cobb, attorney for a group of descendants of the store's founders who together own about 10 percent of the company's stock.
Cobb contended that Taubman should not be allowed to vote his shares because he effectively controls the company, since his stock is enough to allow him to veto any other merger proposal. Under District of Columbia law, approval by two-thirds of the shares is needed to ratify corporate mergers.
Woodies "is in no way under control or domination of Mr. Taubman," argued Irwin Goldbloom, Taubman's attorney, before a crowded courtroom. Attending the hearing were nearly two dozen descendants who are fighting Woodies. Also in attendance were Woodies' top three executives, who not only would remain in control, but also would receive significant benefits under the Taubman proposal.
"Mr. Taubman has no capacity of forcing this merger on other shareholders," Goldbloom added. If shareholders don't like his offer, "they have every opportunity to vote this merger down."
Peggy Kerr, attorney for Woodies, added that if the shareholders meeting is blocked, Taubman's deal might disappear because the merger agreement ends on Sept. 30. Kerr said that Milstein might not formalize his bid if Taubman's is not approved.