Takeover targets fight back
By EDITOR Joel Dreyfuss REPORTER Michael Rogers

(FORTUNE Magazine) – While the takeover game hasn't abated, the defense seems to be scoring lately as often as the attacker. First Revlon announced a plan to buy up to 26% of its stock in exchange for notes and preferred stock that would cost the company $575 million in new debt, a move that left Pantry Pride, which had announced a $1.9-billion tender offer for the company, strangely silent. Two days later Union Carbide, faced with a possible takeover threat from GAF Corp., which owns nearly 10% of Carbide stock, announced a major restructuring, including plans to buy about 14% of its own shares. Carbide, however, is up against a formidable foe in GAF Chairman Samuel Heyman, a Connecticut shopping center developer who won control of GAF in 1983 after a bitter proxy battle. The same day, Westinghouse Electric Corp., which is under no immediate threat but is a frequent subject of takeover rumors, said it planned to sell its cable TV operations (estimated value: $2 billion) and spend about $1 billion buying more than 14% of its common stock. Earlier CBS drove off Ted Turner with a stock repurchase plan that more than doubled the company's debt. Some takeover specialists are still catching their prey -- Carl Icahn recently overwhelmed Trans World Airlines, Sir James Goldsmith outmaneuvered Crown Zellerbach, and Irwin Jacobs seized AMF. ''But it's not easy pickings anymore,'' said Jesse Unruh, California state treasurer and founder of the Council of Institutional Investors, a group of pension fund trustees who oppose expensive takeover defenses such as greenmail. Two court decisions have posed problems for acquirers. In February a Delaware chancery court upheld a plan by Household International to issue warrants giving stockholders the right to buy an acquiring company's stock at half the market price. And in May the Delaware supreme court ruled that Unocal could exclude T. Boone Pickens from its offer to shareholders to buy back stock at 50% more than the market price.