TENDER OFFER: The Sneak Attack in Corporate Takeovers by Dorman L. Commons

TENDER OFFER: The Sneak Attack in Corporate Takeovers

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Not even close to the whole story on Corporate America's acquisition rampage; rather, one insider's sketchy recap of how his company was picked off, with some cursory, inconclusive commentary on the bigger picture. Until May 1983; Commons was CEO of Natomas, a West-Coast conglomerate whose diversified operations ranged from shipping (American President Lines) through exploration/production contracts with Indonesia's national petroleum company. One fateful Friday, however, Diamond Shamrock, a Dallas-based chemicals cone. em eager to expand its stake in the energy field, made a surprise tender for control of Natomas. Less than two weeks later, notwithstanding well-laid contingency plans and blue-chip advisors retained to mount a defense under just such circumstances, Natomas ceased to exist as an independent entity. Commons provides a first-hand, frankly one-sided--and bland--account of the brief siege which, save for those directly involved, was singularly devoid of drama. Initially, he and his management team considered a variety of countermeasures--e.g., hauling their unwelcome suitor into federal court on grounds of inadequate disclosure and launching a delaying action at the Maritime Administration, which subsidized APL. In short order, though, they concluded that a conditional surrender made the most sense for all parties. On balance, the author negotiated a good deal for Natomas shareholders; among other things, it gave them a favorable exchange ratio for their stock and a pro-rata equity interest in the shipping line, which was spun off as a stand-alone venture. An inner circle of top Natomas executives (including Commons) who were not kept on received handsome amounts of severance pay under the terms of eleventh-hour employment contracts. As corporate consolidations go, the Natomas/Diamond Shamrock affair ranks low as an example of consequential conflict. Nor does Commons compensate for this lack with either useful or original judgments on the broader implications of his company's absorption. A far better choice for anyone seeking insights on the takeover game's realities is Peter F. Hartz's Merger (p. 520), which details the abortive 1982 pursuit of Martin Marietta by Bendix--now a part of Allied Corp.

Pub Date: Oct. 4th, 1985
Publisher: Univ. of California Press