ANNAPOLIS, FEB. 4 -- Maryland General Assembly leaders are preparing legislation to limit hostile corporate takeovers, a step a number of other states have taken in the past year in an effort to preserve jobs and tax revenues.
A bill containing a three-pronged approach to protect shareholders is expected to have several prominent legislative sponsors when it is introduced next week, including Senate President Thomas V. Mike Miller (D-Prince George's).
The measure is being proposed at a time when legislatures nationwide are feeling pressure from local companies worried about becoming takeover targets and are looking for ways to ward off unfriendly bidders.
The measure also is being introduced in Maryland at a time when legislators and the administration of Gov. William Donald Schaefer are searching for ways to minimize possible damage to Maryland stores owned by Boston-based Stop & Shop Cos. Inc. from an $860 million takeover attempt by the Landover-based Haft family.
Elected officials joined union representatives at a press conference here today to urge the Hafts to drop their bid for Stop & Shop, which owns supermarkets in New England and the Bradlees department store chain. Union officials are urging Maryland and other states in which Stop & Shop has stores to adopt measures to protect workers who might lose their jobs or be otherwise affected by a change in ownership of the company.
The Hafts were deterred last year from an attempt to take over Minneapolis-based Dayton-Hudson Corp. when the Minnesota legislature passed emergency antitakeover legislation. The family, which controls Dart Group Corp., Crown Books Corp. and Trak Auto Corp., has had no comment about the efforts being made by their home state to stop their current takeover plans.
Lt. Gov. Melvin A. Steinberg said the administration is looking for a political avenue to stop or slow the Hafts' takeover effort, in addition to weighing legislative methods. He said, however, he did not want to hold out false hopes to the workers at Bradlees stores in the state.
"If we can't prevent a takeover," he said, "it's critical to see what programs are available" to help the 5,000 Bradlees employees in Maryland who could be affected.
The Hafts have said they would not close Bradlees stores if they took over Stop & Shop, but some analysts have speculated that Bradlees could be sold or pared down as a defensive tactic by Stop & Shop.
One of the central provisions of the bill to be introduced Monday would impose a five-year moratorium on the completion of any hostile takeover.
A Delaware law enacted Tuesday containing a three-year moratorium, which affects more than half the nation's Fortune 500 companies, is already facing a court challenge.
The proposed legislation also would amend Maryland's "fair price" statute to prevent a rush to sell to a hostile bidder. It would protect minority stockholders from getting hurt in mergers by requiring that all shareholders get the same price for their shares.
"It averts a stampede at the front end," said Jim Hanks, a member of the State Bar Association's committee on corporate acquisitions, which drafted the bill.
The legislation also would freeze the voting rights of anyone acquiring major amounts of stock in a company unless other stockholders approved. This clause would be triggered at various ownership levels.
The proposed legislation would bring Maryland in line with at least a dozen states that have beefed up their takeover laws since the U.S. Supreme Court last April upheld sweeping antitakeover legislation enacted in Indiana.
The Indiana law gives greater voting rights to those stockholders who held shares before a takeover effort. It also increases the time it takes to complete a takeover.
State Del. Peter Franchot (D-Montgomery) has introduced a nearly identical bill to the one to be offered by Miller.
"I think there's an opportunity for major proworker, antiraider legislation," he said.