In a day full of merger maneuvering, Martin Marietta Corp. said yesterday it was in a position to buy control of its opponent, Bendix Corp. For its part, Bendix said it had lined up enough stock to take control of Marietta.
But neither company will be able to buy the other for several days, leaving plenty of time for new moves by either firm or by Martin Marietta's ally, United Technologies Corp.
It appears increasingly likely that the three-way merger war will be decided in court, with far-reaching implications for future mergers. In yesterday's developments:
* Martin Marietta, a Bethesda-based aerospace firm, announced that a majority of Bendix shareholders had pledged it their shares.
* Bendix charged that more than one-third of the shares pledged to Martin Marietta, a block that came from Bendix's employe stock ownership plan, had been handed over illegally by the plan's trustee, Citibank. The huge bank said it was just trying to keep its options open while control of the block of stock is disputed.
* Bendix, which earlier this week said it had received pledges for a majority of Martin Marietta's shares under its offer for the company, said after a four-hour board meeting in New York that it would increase the number of Martin Marietta shares it will buy.
* Bendix rejected Marietta partner United Technologies' offer for the company and retained an additional investment banker. The latter move prompted speculation on Wall Street that Bendix was dissatisfied with the advice it has been getting.
* Legal skirmishing in the takeover battle continued. In Michigan, the corporation and securities bureau of the state Department of Commerce ordered that Martin Marietta and United Technologies cease and desist in their plans to take over and carve up Bendix, which is based in Michigan.
Martin Marietta and UTC immediately appealed the ruling to a U.S. District Court judge in Detroit, who upheld the cease-and-desist order, which only applies in Michigan. Martin Marietta and UTC said they would continue to appeal and will carry on with their offers regardless.
* A UTC spokesman predicted that both Martin Marietta and Bendix will back off, leaving UTC to buy Bendix. He would not reveal the basis for the prediction.
The stream of announcements yesterday left securities analysts somewhat befuddled. They said the contest had become too complicated to predict a winner, and was likely to end up being decided in the courts.
The stock market, however, seemed at day's end to be giving a slight edge to Bendix. Bendix stock dropped while Martin Marietta's rose, indicating that investors were purchasing Martin Marietta shares in hopes of receiving Bendix's $48-a-share price.
Martin Marietta rose $1.62 to $37.25. Bendix fell $2 to $59. Martin Marietta and United Technologies have made separate, but coordinated, $75-a-share offers for just over half of Bendix, an auto parts, machine tool and aerospace electronics company.
Martin Marietta said it had received tenders for 63.5 percent of Bendix's total outstanding common shares, counting shares represented by preferred stock convertible into common shares. Without the convertible stock, it has tenders for 75 percent of Bendix's common stock.
Any shares tendered to either side in the battle can be withdrawn any time in the next few days, however. Martin Marietta can start to actually buy Bendix shares Sept. 22.
Martin Marietta has been seeking 11.9 million shares of Bendix, just over half the total, offering $75 cash apiece for them. The company has said it would then complete a merger by exchanging its own stock at around $55 for each Bendix share.
The shares tendered Martin Marietta, however, included a block of 4.5 million shares owned by the Bendix Salaried Employee Stock Ownership Plan and administered by Citibank.
Bendix officials say there is no mechanism under which those shares can be legally tendered to Martin Marietta, and they charged yesterday that Citibank's action "was in violation of the trust agreement, unauthorized by the plan, and clearly exceeded the bank's power as trustee." They demanded that the shares be withdrawn.
In a statement, Citibank said, "We took this action to preserve all available options." Sources said Citibank feared that if it didn't tender the shares and a lawsuit later proved that they could have been pledged, it would have been guilty of breaching its responsibilities as trustee and liable to make up any lost profits to participants in the plan. The bank reasoned that if it was wrong it could still withdraw the stock, sources said.
Bendix, which earlier this week raised the offering price for Martin Marietta stock to $48 a share from $43 in an effort to lock up the 58 percent of Martin Marietta shares already tendered to it, took another step to strengthen its position yesterday by increasing the number of Martin Marietta shares it is seeking from 15.8 million to 18.5 million -- about 51 percent of the total number of Martin Marietta shares. Bendix expects to complete the merger by swapping lesser-valued stock for the remaining shares of Martin Marietta.
With the 1.6 million Martin Marietta shares Bendix already owns, that would give Bendix about 55 percent of the company. Bendix will be able to purchase the Martin Marietta shares tendered to it next Friday.
Bendix said it would press its offer despite the opposition from Martin Marietta and the arrangement between Martin Marietta and United Technologies. Under that agreement, UTC has made its own $75-a-share offer for Bendix, contingent on Bendix's and Martin Marietta's bids for each other being withdrawn.
UTC then would split Bendix with Martin Marietta. Analysts see the agreement as a safety net for Martin Marietta. Yesterday, Bendix's board, as expected, rejected UTC's offer as "grossly inadequate."
But Bendix, which by most accounts did not expect such aggressive opposition from Martin Marietta when it opened the battle in late August, has been taking steps to protect itself.
The company said this week it had signed 16 key executives to "golden parachute" long-term contracts giving them financial security if the company is taken over. Martin Marietta has given similar contracts to 28 top officials.
And Bendix also moved yesterday to add to its arsenal of takeover experts, enlisting First Boston Corp. to aid Salomon Brothers, its investment banker, in plotting strategy. First Boston is considered one of the best investment bankers in the merger field, particularly adept at setting up complicated financial deals to give its clients an edge.
A Bendix spokesman, however, shrugged off investment-community speculation that First Boston had been brought in because Salomon Brothers had in some way been deficient.