When Minnesota lawmakers rushed to rescue the state's biggest corporation from Washington's Haft family last week, they followed in the footsteps of other states that have tried to block corporate takeovers they fear will cost them jobs and revenue.
Since the Supreme Court's landmark ruling in April upholding Indiana's law to limit hostile raids, Minnesota, North Carolina and Florida have enacted similar legislation in response to brewing takeover wars in their states.
Minnesota had no plans to rewrite its law until Dart Drug founder Herbert Haft and his son Robert made a bid to buy Dayton Hudson Corp., the giant department store chain based in Minneapolis. In one week, the company engineered a special session of the legislature which quickly threw up a defense against the Hafts.
Some 22 states already have laws dealing with shareholder rights during hostile takeovers -- many modeled on the Indiana law -- and several more are considering similar measures.
In California, for example, the legislature is considering nine such bills this year, and five or six more are planned for next year, according to Dick Damm, of the Senate Office of Research in Sacramento.
Lawmakers in Missouri and Nevada this year approved measures that either mirrored or included major provisions of the Indiana law, while existing laws were modified in Iowa.
Central to the campaigns to pass such laws has been the threat that a hostile suitor might try to pay off debt incurred in a buyout by selling or closing various divisions of the target company or by cost-cutting that might include massive layoffs.
The North Carolina General Assembly in April and May enacted legislation to help Burlington Industries Inc. prevent an unwanted takeover by an investor group led by New York financier Asher B. Edelman and Montreal-based Dominion Textile Inc.
The Florida Legislature approved a bill in response to a hostile takeover threat to Harcourt Brace Jovanovich Inc. by British publisher Robert Maxwell.
The Indiana law gives shareholders the right to decide whether an investor who buys a big block of stock in a company, or even a majority interest, can vote those shares in corporate elections.
The stockholders' vote must take place either at the target company's next annual stockholders meeting, or at a special meeting scheduled within 50 days.
Thus, in most cases, the hostile bidder faces the inability to vote any stock it acquires for at least 50 days -- and management has the same period to mobilize its defenses.
Antitakeover laws in a number of states also prohibit hostile suitors from selling assets of a target company for a certain period of time -- say, five years. That is intended to make lenders reluctant to finance a hostile takeover of a company by limiting possible moves to pay off debt incurred in the buyout.
Indiana and several other states also require corporate raiders to pay all shareholders the same price, rather than offering a premium price for a controlling stake in the company and paying a lower price for the rest of the stock. Such two-tier offers are intended to get shareholders to tender their stock quickly to hostile bidders before management can find a means of staving off the bid.
Several other states in the past have enacted measures in specific instances in which local companies faced hostile bidders.
But some states have had their attempts to limit raiders short-circuited by the courts or other authorities on the grounds that some of their provisions interfered with interstate commerce or existing federal takeover statutes.
A notable exception to the trend toward drafting new laws has been Delaware, where about 40 percent of the New York Stock Exchange-listed companies are incorporated. Delaware lawmakers earlier this month decided against considering a law modeled on the Indiana statute during their current session because of uncertainty about the practical effects of the proposal.