Merry-Go-Round adopts stockholder rights plan

September 24, 1991

Merry-Go-Round Enterprises Inc. has adopted a poison pill stockholder rights plan "intended to help assure that all stockholders receive fair and equal treatment in the event of an unsolicited attempt to acquire the company."

The Joppa-based chain of specialty retailer stores announced the new plan late Friday and said it soon would mail letters to shareholders to explain the plan.

"I would not know if there is any current reason why," said Bud Bugatch, a stock analyst at Ferris Baker Watts who covers the New York Stock Exchange-listed retailer.

"But with the death of [co-founder] Harold Goldsmith and the disposition of his shares, it's not surprising they would do this," he added.

Mr. Goldsmith died in February when his chartered jet crashed near Aspen, Colo. Shortly thereafter, the company announced plans for a public stock offering of 2.7 million shares, including 500,000 shares from the Goldsmith Foundation and 400,000 shares from Mr. Goldsmith's estate.

The rights plan, intended to make a hostile takeover prohibitively expensive, goes into effect next Monday.

At that time, one right will be attached to each share of common stock. After that, if someone accumulates 15 percent or more of the company's stock, each right other than those held by the 15-percent shareholder will entitle its owner to buy company securities having a value equal to two times the $56 exercise price of the rights.

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