Marriott won't tie merger, takeover Shareholders will get to vote on separate issues

Lodging

March 17, 1998|By Jay Hancock | Jay Hancock,SUN STAFF

Marriott International Inc. backed down yesterday from a measure that linked a popular merger proposal with a controversial anti-takeover scheme, declaring that shareholders will be allowed to vote separately on the takeover issue.

Anxious to complete its proposed restructuring and merger with Sodexho Alliance S.A., Marriott promised to repeal the takeover rule and a measure to create two stock classes unless shareholders approve them at a meeting in May.

That led two prominent stockholder advisory firms to drop their opposition to the Sodexho merger and related restructuring, which will be considered at a postponed shareholders meeting on Friday.

Marriott owners originally were supposed to vote today, but the company pushed the meeting back to let shareholders absorb yesterday's last-minute switch.

Unzipping the merger proposal from the more-controversial items removed a threat to the Sodexho deal, said John J. Rohs, who follows Marriott for Schroder & Co., a New York investment firm.

"They want to make sure the Sodexho transaction can be accomplished," Rohs said. "The last thing they'd want to do is have the transaction shot down because people were unsure about what the second part of the transaction meant."

Both the Proxy Monitor and Institutional Shareholder Services, stockholder advisers which had urged a "no" vote on the Sodexho deal, changed their recommendations to favorable +V yesterday.

"The deal overall is quite good, and in the long run it will create a lot of shareholder value," said Desmonde Printz, a senior analyst with Proxy Monitor.

However, he added, under the original proposal "the board actually used this opportunity to strengthen their anti-takeover defenses."

In the Sodexho deal, Marriott would spin its lodging, senior living and distribution businesses into a separate company and merge its management-services operations with Sodexho's North American unit.

The new company, Sodexho Marriott Services Inc., would be the country's biggest hospitality-management concern, with annual sales of $4 billion.

On Marriott's shareholder ballot, the Sodexho transaction is bundled with the proposals on takeover defenses and dual stock classes.

Until yesterday, stock owners were being offered the package on an all-or-nothing basis, and analysts had contended that Marriott management was trying to sneak through objectionable measures on the coattails of the popular merger.

One proposal would have tripped a "poison pill," anti-takeover shield when someone acquired 15 percent of Marriott's stock -- down from a 20 percent trigger now.

Another proposal would have created two classes of stock -- one with 1 vote per share; another with 10.

Marriott had argued that a double-stock classification would enable it to grow through mergers more easily.

Critics, including the Hotel Employees & Restaurant Employees International union, had said the double-stock setup could allow the Marriott family to increase its control over the company by loading up on the supervoting shares.

"We knew that we had been getting strong support on the transactions" to merge with Sodexho, said Marriott spokesman Tom Marder. "At the same time, we have gotten some concerns voiced by some shareholders about the dual-class issue."

The two-stock and anti-takeover proposals are still on the ballot for Friday's meeting, and still packaged with the merger measure. But Marriott promised to unravel them unless a majority of shareholders vote to keep them at the company's annual meeting in May.

Pub Date: 3/17/98

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