In what may be the first hostile takeover move against a major U.S. aerospace company, a group led by corporate raider T. Boone Pickens Jr. has indicated that it plans to acquire a significant stake in Boeing common stock, the Seattle-based company disclosed yesterday.
Boeing said that it received a notice dated June 29 from Mesa Limited Partnership, the organization that Pickens controls, that it was filing its intention under the Hart-Scott-Rodino federal antitrust law to accumulate more than $15 million of Boeing shares. After a 30-day waiting period, that stake could be increased to as much as 15 percent of Boeing's 155.1 million shares outstanding.
A hostile acquisition against a key defense contractor has been considered unlikely until now, partly because of the potential for government intervention on national security grounds. But analysts say that Boeing's recent performance has disappointed investors and that the company's undervalued stock has made it vulnerable to a hostile action.
Boeing directors, apparently viewing the Pickens threat seriously, moved swiftly to erect a complex takeover defense that goes into effect when it designates an investor an "adverse person."
A stockholder rights plan would distribute purchase rights to common shareholders, enabling them to buy additional common shares at half the effective market price, Boeing said. The plan would exclude the "adverse person" from those purchase rights, which would significantly increase the cost of acquiring the company.
"We believe that this plan protects the interest of our stockholders in the event that they and Boeing are confronted with coercive or unfair takeover tactics ... . including offers that do not treat all stockholders equally," said Frank Shrontz, Boeing's president and chief executive.
Officials at Mesa's Amarillo, Tex., headquarters did not respond to a Los Angeles Times inquiry. Pickens is one of the foremost corporate raiders, having launched numerous hostile takeover efforts that usually ended unsuccessfully but not before he reaped a substantial profit.
Aerospace industry analyst John Simon said that he expects that Pickens' goal may not be to take over Boeing, but rather to reap a profit by selling out after forcing up Boeing shares from their currently depressed levels.
"Apparently, Pickens has run out of oil companies to pursue and now he is looking for other undervalued industries," Simon said. "The aerospace industry is selling at a substantial discount to the market. We haven't seen a biggie go yet, like a McDonnell, a General Dynamics, a Boeing."
Boeing stock fell 75 cents to $46.62 1/2 yesterday in New York Stock Exchange trading, which ended for the day before the Pickens announcement. The company has about 155.1 million common shares outstanding, giving it a market value of about $7.23 billion.
But if Boeing is acquired, it is almost certain to go for a much higher price, at least 20 percent over its existing market value. At the top end, Boeing could fetch $15 billion, or an amount equal to its annual sales.
A deal valued at $15 billion would be the largest acquisition in history, exceeding the $13.2 billion that Chevron paid for Gulf in 1984.
Boeing also reported yesterday that its second-quarter profit dropped by 30.8 percent because of rising costs for research and development and for production. Boeing earned $117 million on sales of $3.48 billion, down from profits of $169 million on sales of $4.03 billion a year earlier.