AT&T suit dismissed in hostile takeover NCR seeking protection under Maryland law

December 10, 1990|By Kelly Gilbert | Kelly Gilbert,Evening Sun Staff

A federal judge in Baltimore today dismissed a suit by American Telephone and Telegraph Co. that aimed to bar NCR Corp. from pursuing litigation to prevent a hostile takeover by the communications company.

Judge Frederic N. Smalkin ruled that his court does not have jurisdiction in the suit, filed last Wednesday in U.S. District Court in Baltimore, because AT&T has not actually sought or obtained proxies from NCR stockholders.

Proxy acquisition by AT&T could force the court to consider legal issues involving the Maryland Business Combination Act and the state's Control Shares Act, two anti-takeover measures enacted by the General Assembly in 1989.

NCR Corp. is based in Dayton, Ohio, but the takeover battle was being fought in federal court in Maryland because NCR is a Maryland-chartered corporation.

Citing a Supreme Court precedent and other case law, Smalkin said legal issues involved in the takeover bid cannot be decided by the courts at present.

AT&T said last week it would seek to acquire NCR and offered a tender of $90 per share, or about $6.1 billion, for NCR common stock. The company's lawyers said in court today that AT&T is "contemplating" acquisition of the proxies, but has not yet tried to acquire them.

Smalkin said that is not enough to prompt him, under existing laws, to grant AT&T's motions for a temporary restraining order, or for injunctions or a declaratory judgment against NCR to prevent the target from gearing up to fight the takeover bid.

"There has to be a situation where there is no escape," the judge said, noting that AT&T must first acquire enough NCR proxies to ignite the takeover fight before he could consider legal action.

John Henry Lewin Jr., one of AT&T's lawyers, told Smalkin that the company would decide "within 48 hours" whether it will try to acquire proxies for NCR stock from the target's stockholders and reinstitute the legal battle.

Francis B. Burch Jr., who represents NCR Corp., told the judge that the takeover situation "is in negotiation" between the two companies.

Burch's remarks apparently referred to a statement last week by NCR Chairman Charles E. Exley Jr. that the target company, the nation's fifth-largest computer firm, would not consider a tender offer of less than $125 per share, or about $8.5 billion.

NCR lawyer Joseph S. Allorhand also said the company and its directors "haven't considered [the possibility of] a cash offer" for NCR, which is one of the alternatives AT&T could choose in its acquisition attempt.

There was no immediate indication whether AT&T would make such an offer.

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