Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, March 1, 1994 TAG: 9403010082
SECTION: BUSINESS PAGE: C-7 EDITION: METRO
SOURCE: Associated Press
DATELINE: HARRISONBURG LENGTH: Medium
WLR's board of directors adopted the protection plan Feb. 6 after rejecting Tyson's unsolicited offer to buy the Rockingham County company for about $329 million.
Under the plan, if Tyson were to take over WLR, the nation's No. 8 poultry producer, it either would have to keep 600 WLR employees on the payroll or give them severance pay. To fire WLR President Jim Keeler, Tyson would have to pay $1.8 million.
To make a takeover even more difficult, WLR let small shareholders buy additional stock at half price. And four WLR executives, including Chairman Charles Wampler Jr., resigned so they would become disinterested shareholders and be in better positions to block a takeover.
Also on Feb. 6, WLR filed a lawsuit asking the U.S. District Court in Harrisonburg to rule that its shareholder-rights plan and severance plan are legal. It also asked the court to rule that the Virginia Stock Corporation Act making takeovers difficult is constitutional.
In a statement Monday, Tyson said WLR's board of directors was making the hostile acquisition prohibitively expensive by adopting what it called poison-pill and golden-parachute tactics, moves common in the 1980s when companies waged battles with takeover investors.
Tyson's counterclaim, filed Friday in federal court, said WLR's directors were trying to entrench themselves and WLR's present officers. Tyson alleges that in taking those actions, the directors breached their duties to WLR's shareholders.
Tyson also asked the federal court to declare Virginia's anti-takeover laws unconstitutional and invalid.
Tyson offered WLR's shareholders $30 a share for their company to merge into Tyson or a Tyson subsidiary. As an alternative, Tyson proposed negotiation of a tax-free reorganization under which WLR shareholders would get part cash and part Tyson stock for their WLR shares.
WLR's stock closed at $28.25 a share Monday, up 62 1/2 cents from Friday, trading 23,600 shares on the Nasdaq market. Tyson's stock closed at $21.50 a share, up 25 cents, trading 569,000 shares on Nasdaq.
Tyson, based in Springdale, Ark., became the nation's largest chicken processor when it acquired Holly Farms Foods Inc. in 1991. The company recently expanded into the pork and seafood markets.
Tyson reported $3.2 billion in assets and $4.7 billion in sales in fiscal 1993. WLR, which processes chickens and turkeys, reported $265 million in assets and $618 million in sales.
by CNB