Hostile takeover

Brunswick Technologies Inc., which is being hotly pursued by a rival in what has been described as a hostile takeover, must feel flattered at being thought so desirable. But BTI’s board members, who stand to lose their positions in the takeover, want the Legislature on its final day of the session to intervene in the sale. Though many lawmakers may feel reluctant to get involved in what is a legitimate, if unwanted, business transaction, there is solid reason for them to support LD 2693.

The emergency legislation is a delaying tactic, a move to give the officers of the Maine-based composites company more time to look for options to VetroTex CertainTeed’s attempt to buy up its shares a $8 per share. CertainTeed, owned by Compagnie de Saint-Gobain of France, currently owns 14 percent of the shares. For the last month, BTI board members have been trying to prevent CertainTeed from taking over, by issuing more stock and complaining in court; but it hasn’t worked; hence, the emergency legislation.

LD 2693 changes who may call a special meeting of stockholders for the purpose of removing members of the board of directors — current law demands more than 10 percent; the bill would push that to 50 percent. The bill is sunsetted – that is, it will cease to exist after a short while so that it applies only to this particular case.

BTI is a $1.2 billion company that makes composites from glass, carbon and Kevlar into parts for cars, buses, boats and heavy machinery, among other things. Its materials depend on being light, strong and corrosion resistant. Based in Maine, it also has plants in Texas and Britain. It is the sort of high-tech firm, with a growing demand for its product, that Maine should be proud to have cultivated, and it is no surprise that BTI has research partnerships with the University of Maine and the state’s technical-college system.

What would happen to it under the takeover is anybody’s guess, according to current board members. They want the chance to better understand what the deal means for themselves and for employees and stockholders. So should the state, which has invested resources in ensuring that local companies like BTI are successful.

There is no great business principle at stake in this legislative change. Maine, like other states, regulates under what conditions stockholders may meet, and has done so for at least the last 30 years. Certainly, current law never intended the relatively low-level requirement of stock ownership to be an invitation to hostile takeovers. And just as certainly, Maine has not invested in research and development and nurtured high-tech firms to see them swept away by distant competition using Maine’s lax statutes against local companies.

LD 2693 is a difficult bill because of the extremely short time lawmakers have had to consider it. The necessary haste may produce unintended consequences, but the apparent alternative produces even more doubts. Given these unknowns, lawmakers would do best to side with the home team and learn from the experience.