An antitakeover bill passed by the Delaware General Assembly this week casts a cloud of uncertainty over Black & Decker Corp.'s surprise $1.8 billion cash bid for American Standard Inc.
The controversial legislation, which attracted national attention to Delaware because of its prominence as an incorporation capital, will be signed next Thursday by Gov. Mike Castle, his press secretary, Jeff Welsh, said.
The bill prohibits a hostile suitor from taking over a company for three years after the buyer has acquired at least 15 percent of a company's stock.
However, the buyer can take control of a company if he acquires 85 percent of its stock in one transaction, or if the buyout is approved by two-thirds of the other stockholders or by a majority vote of the board of directors.
American Standard is based in New York but is incorporated in Delaware.
"It's too soon to tell what the impact will be," said Lowell Bowen, an attorney with Miles & Stockbridge in Baltimore who is representing Black & Decker in the $56-a-share bid. "I would expect that we will get more than the 85 percent."
Towson-based Black & Decker, one of the nation's biggest producers of power tools and home appliances, had sales of $1.9 billion in the year ending Sept. 27.
American Standard, a leading manufacturer of plumbing, construction, air conditioning and transportation equipment, had annual sales of $3 billion.
When Black & Decker made the acquisition offer Wednesday, the price of American Standard shares soared nearly $21 on the New York Stock Exchange, as investors anticipated a bidding war.
American Standard has not said it will fight the takeover attempt, saying it would have a recommendation for shareholders by Feb. 9.
"The corporation has taken no stand. ... This was a surprise," said American Standard spokeswoman Lois Stewart. "Anything can happen."
Stewart said the new law's impact will "depend on what a hostile tender is and what our board of directors does."
Black & Decker employs about 21,000 people, about 5,400 regionally, while American Standard has a work force of about 39,000.