MONTPELIER - Chase Industries Inc.'s directors yesterday announced a so-called “poison pill” defense to help ward off an unsolicited takeover, little more than a week after investors proposed buying the Montpelier brass rod and steel tube maker.
Under the anti-takeover measure, also called a stockholder rights plan, Chase Industries' board will be able to dilute unwanted bids either to own at least 20 percent of company shares or to increase holdings if the stockholder already has that much. Other shareholders will be able to buy stock at a reduced price, potentially causing a flooding of the market that would dilute a prospective acquirer's holdings while making a buyout prohibitively expensive.
“Chase Industries' board members concluded the shareholder rights plan was in the best interests of the company and all the shareholders,” said Matt Sherman, a spokesman for the Montpelier company.
Chase Acquisition Corp. of Wilmington, Del., made up of investors who own almost half of Chase Industries' stock, offered Dec. 18 to buy 2.3 million company shares - and a controlling interest that would lead to more - for $24.2 million, or $10.50 a share. The offer has not yet commenced, according to Chase Industries.
Robert F.B. Logan, president of Chase Acquisition, could not be reached for comment yesterday evening.
Chase Industries' stock has surged from little more than $7 a share since the investor-buyout group's announcement to more than $10 a share on the New York Stock Exchange. The stock closed unchanged yesterday at $10.19 a share at 4 p.m., about an hour before Chase Industries announced its poison-pill defense.
Chase Industries announced yesterday several amendments to company bylaws, including a requirement to give advance notice of stockholder plans to nominate directors or of other proposals at meetings. Another amendment calls for the board - not stockholders - to schedule special shareholder meetings.
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