American Telephone and Telegraph Co. today asked a federal judge in Baltimore to restrain NCR Corp. from pursuing a federal suit in Columbus, Ohio in an effort to block a $6.1 billion hostile takeover bid by AT&T.
AT&T's motion for a temporary restraining order, or TRO, said the U.S. District Court here is "the appropriate forum" for adjudication of claims by both sides.
AT&T filed suit here Wednesday and in Columbus, Ohio, yesterday to block NCR from halting the takeover attempt. But NCR filed suit in Columbus yesterday seeking court approval of its shareholders' rights plan. The plan is a critical part of its not-yet-pursued poison pill effort to block AT&T from acquiring enough common stock to force a stockholders' vote on the acquisition.
A court official said Judge Frederic N. Smalkin has scheduled a meeting Monday with lawyers representing AT&T, NCR and representatives of Maryland Attorney General J. Joseph Curran Jr., NCR's co-defendant, to discuss the case. It was not immediately clear whether that will be a private conference in chambers or a public court hearing at which the judge might rule on the restraining order.
AT&T said in its TRO motion that since it filed suit first in Baltimore, and since NCR is a Maryland-chartered corporation despite its Dayton, Ohio headquarters, Smalkin should join the federal cases here.
AT&T's original complaint requested temporary, preliminary and permanent injunctions against NCR and Curran to prevent them from using state antitakeover laws to block the takeover bid.
Curran is a co-defendant because he is charged with upholding the state antitakeover laws that might apply in the case. He intervened in an unrelated federal case here last year to defend state anti-takeover laws against a constitutional challenge by a Louisiana real estate investors' trust.
The AT&T suit was the first legal salvo in the communications giant's hostile takeover bid for NCR, the nation's fifth-largest computer company.
The corporate feud has quickly become a bitter and wide-ranging court battle over the takeover bid, which began last week with an AT&T tender offer of $85-per-share for NCR's common stock.
David Clarke, who represents Maryland-chartered NCR Corp. here, emphasized in an interview yesterday that NCR's suit in Columbus was filed independently, not in response to the AT&T litigation. He said NCR would oppose AT&T's motion for the restraining order.
AT&T asked the court in its original complaint and the TRO motion to enjoin the defendants from filing suits of their own to "enforce or apply" the 1989 Maryland Business Combination Act to the suitor's takeover bid.
Such legal maneuvers by NCR or Curran could bar AT&T from acquiring enough NCR stock or proxies to make the takeover work. If it applies, the state law would impose an automatic five-year moratorium on AT&T's takeover attempt unless NCR's lTC directors either approve the suitor's acquisition of more than 10 percent of the target's common stock or they adopt a charter amendment opting out of the statute's protective provisions.
AT&T upped the ante in its initial tender offer to $90 per share of NCR common stock Wednesday. The lawsuit said the latest offer is "a premium of nearly 90 percent over the market price of NCR's common shares," and it amounts to $6.1 billion based on NCR's 68 million outstanding shares.
NCR's board met the same day in New York, voted to reject the tender offer and called it "grossly inadequate." Chairman Charles E. Exley Jr. immediately told AT&T Chairman Robert E. Allen the target company would not consider less than $125 per share, or about $8.5 billion.
The target company's board also voted Wednesday to opt out of the Maryland Control Share Act, another anti-takeover law, in an attempt to block AT&T from seeking a special shareholder's meeting to vote on its tender offer. By opting out, NCR is forcing its shareholders to control 25 percent of the company's stock before they can call for such a meeting.
The NCR board also strengthened its poison pill provision by reducing the trigger point so it would automatically kick in if the suitor acquires 15 percent of NCR's common stock. The trigger point previously was 20 percent.
Under the poison pill provision, NCR could sell new stock to existing shareholders at a reduced rate, presumably 50 percent of face value, to dilute the percentage of AT&T's shares.
Deputy Maryland Attorney General Dennis M. Sweeney said yesterday that office has no direct role in the takeover suit. "We're going to sit on the sidelines unless they attack the validity of the [state] statute," he said.
In the previous takeover case here, U.S. District Court Judge Joseph C. Howard upheld the constitutionality of both the Business Combination Act and the Control Share Act.