Martin Marietta Corp. bought 44 percent of Bendix Corp., early today, hours after Bendix agreed with $6 billion petrochemical giant Allied Corp. to a $2.3 billion merger plan designed to fend off Marietta.
Martin Marietta said it would continue buying any Bendix stock offered under its $75-a-share offer until it had 11.9 million shares -- slightly more than half of Bendix.
If Marietta can achieve that goal quickly, it could take formal control of Bendix and cancel the agreement with Allied.
Bendix has bought 70 percent of Martin Marietta but has been delayed by state law from taking control of the Bethesda-based company.
In an indication of how high tensions were running in boardrooms where the multibillion-dollar contest was being fought, four Bendix directors resigned last night, apparently to protest the deal with Allied.
" . . . We came to feel that it was difficult for us to function effectively as directors," the four said in a joint resignation letter released by Bendix. None of the four could be reached for comment.
They were William P. Tavoulareas, president of Mobil Corp.; Donald H. Rumsfeld, president of G.D. Searle & Co.; Wilbur J. Cohen, professor of public affairs at the University of Texas, and Hugo E.R. Uyterhoeven, professor of business administration at Harvard Business School.
Martin Marietta bought the Bendix stock at a total cost of about $750 million despite legal questions about whether the Allied offer for Bendix triggered a federal regulation that delays existing takeover offers for 10 days if a fresh offer is made. Legal sources said it was difficult to determine if the Allied offer was made soon enough to trip the delay.
"Now it's a menage-a-quatre," a Martin Marietta spokesman joked about the complicated, month-long takeover battle, which also includes Marietta ally United Technologies Corp.
It was nearly a five-sided fight. LTV Corp. considered a bid last Thursday to acquire part of Martin Marietta, sources confirmed yesterday.
Martin Marietta's purchase of Bendix stock further clouds the bizarre situation. Even if the company cannot acquire enough Bendix stock to take control, it possesses a potentially important bargaining chip.
It could, for instance, swap the Bendix stock to Allied for Martin Marietta stock owned by Bendix, giving Marietta an opportunity to extricate itself from the predicament.
Bendix, which had waged legal battles against the Marietta offer until nearly the last minute, had no immediate comment on the stock purchase.
Allied entered the fray late Wednesday afternoon at the request of Bendix, which apparently felt itself cornered by Martin Marietta. Attempts by Bendix officials to negotiate a settlement with Marietta fell through yesterday.
Allied said it would pay $85 a share for about 55 percent of Bendix and offer stock and fixed-income securities for the rest. The deal, approved by the boards of both companies, is worth $2.3 billion, including the cost of acquiring the rest of Martin Marietta.
Bendix also agreed to sell its aerospace electronics division to Allied in a separate transaction for $800 million, a transaction common in takeover agreements as a sort of insurance policy. Sale of that division would make Bendix less attractive to Marietta or another purchaser by subtracting one of the company's most valuable assets.
With the Allied agreement, Bendix Chairman William Agee appeared to have decided to sell out to another company rather than face a possible victory by Marietta or United Technologies.
Under terms of the Allied-Bendix agreement, Agee would become president of the combined company while remaining chairman of Bendix, which would be a wholly owned subsidiary.
Agee said in a statement: "I am enthusiastic about this proposal. It is fair to our shareholders and employes, and equally important, it will have the effect of avoiding the dismemberment of Bendix or the serious financial consequences and disruptions which would eventually result from the Martin Marietta proposal."
Some Martin Marietta partisans, however, suggested that Allied's offer might be a red herring designed to scare Bendix shareholders away from Martin Marietta's offer. It would then be reduced or dropped, they suggested, leaving Marietta in Bendix's hands and Allied, perhaps, with some choice assets from the combined company as a reward.
A Bendix source would not rule out the possibility that Bendix and Allied would agree to go separate ways in the end.
A source inside the Bendix braintrust, however, said, "This isn't some tactical move. This is a solution to the problem."
There was no comment from United Technologies, which had made its own offer for Bendix two weeks ago at Marietta's behest. The UTC offer has been on hold since Friday, when Bendix bought 70 percent of Marietta, and UTC officials have since said they are studying their options.
UTC had said it would raise its offer for Bendix to $85 a share from $75 if Bendix were willing to do a "friendly" merger deal -- not unlike the one it struck with Allied.
Yesterday, the Justice Department threw up a further barrier to a UTC-Bendix deal when it requested more information from UTC for its investigation of possible antitrust problems with the deal.
A Bendix source said the company turned to Allied yesterday after settlement negotiations between Bendix and Marietta officials collapsed.
The two companies were discussing an agreement under which Bendix would have sold its Marietta stock back to the Bethesda company and the two would have agreed to leave each other alone, with Bendix then defending itself against United Technologies, according to one source.
"That's when Bendix decided to drop the other shoe," the source said, and Allied entered the fray.
The source said Bendix believed that an Allied offer would forestall the "Pac-man" strategy mounted by Martin Marietta, in which the company was attempting to gobble up a company that already owned a big chunk of it.
But the Allied offer does not work out quite so neatly. Under federal securities law, a new offer for a company puts a 10-day hold on any other outstanding offers for the company. Allied's offer, however, does not formally start until this morning, hours after Marietta bought Bendix stock.
Martin Marietta had considered a similar tactic last week to delay Bendix's purchase of its shares, sources said. It was negotiating with LTV Corp. for that company to make an offer for about 5 percent of Marietta and trigger the 10-day waiting period on the eve of Bendix's purchase of the shares last Friday.
An LTV source said the company would have paid $100 million for 2 million shares of Martin Marietta, then traded them back to the company for its Baltimore aircraft plant and the facility's lucrative B1 bomber contracts.
But at the last minute, Martin Marietta spurned the offer, the source said. LTV Chairman Paul Thayer is a member of Allied's board.