Hanson poison pill stirs bile of investors

Institutional investors yesterday expressed concern over Hanson's plan to put in place a "poison pill" to prevent a takeover of Millennium, the chemicals arm due to be demerged from the conglomerate in October. Hanson defended the move, claiming it was standard practice in the US and had been used successfully at the time of last year's US Industries spin-off.

One leading institution said: "We don't like it at all. Public companies shouldn't have poison pill arrangements. We plan to take it up with the company."

Others expressed surprise that Hanson, whose very existence had been predicated on the art of the hostile takeover, should attempt to put in place an artificial bid-blocking mechanism.

Christopher Collins, vice- chairman of Hanson, described the arrangement, which prevents a potential predator from taking a stake of more than 15 per cent without entering into negotiations with the company, as "a fairly standard US device". He cited statistical evidence showing that companies using the poison pill had acted in the interests of shareholders, boosting the price at which takeover targets were eventually taken out.

He denied that the use of the device implied that Hanson expected a takeover bid for Millennium. But he said that there would inevitably be a transition period during which some UK investors withdrew from the New York quoted company which might lead to the sort of share price weakness that could attract a bidder.

In the 15 months since US Industries, a collection of non-core American businesses, was spun off from Hanson, the proportion of British shareholders has fallen to only 10 per cent. A similar exodus is expected at Millennium.

According to a J P Morgan study, the median takeover premium of companies employing the block between 1988 and 1995 was 51.4 per cent. That compared with a premium of 35.5 per cent for companies without the protection.

Hanson's shares, down from 211.5p at the time of the demerger announcement in January, closed 3.5p lower at 163p.

Comment, page 17

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