Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, July 8, 1994                   TAG: 9407110181
SECTION: BUSINESS                    PAGE: A7   EDITION: METRO 
SOURCE: Associated Press
DATELINE:                                 LENGTH: Medium

TYSON SEEKS TO SCUTTLE VIRGINIA'S ANTI-TAKEOVER LAWS

U.S. District Judge James Michael did not rule from the bench; and the case, along with several other legal challenges stemming from the takeover attempt, may be undecided until the end of a trial in September.

WLR shareholders voted May 21 essentially to reject Tyson's offer to buy the Broadway-based company for $330 million, or $30 a share.

Tyson, the nation's largest poultry producer, claims the Virginia laws violate clauses of the U.S. Constitution that regulate interstate commerce and give federal laws precedence over state laws.

Tyson attorney Thomas Farrell said the Supreme Court has ruled that hostile takeovers - purchasing a company over the objections of its board of directors - can benefit shareholders by ridding them of ``an entrenched, inefficient management.''

But Farrell said Virginia laws are designed to protect company managers at the expense of shareholders. The General Assembly, he said, wanted to prevent out-of-state companies from coming in and telling Virginia companies how to run their businesses.

``In Virginia, under its scheme of laws, there is simply no way a hostile takeover can succeed,'' he said. ``It squelches all competition for control of Virginia companies.''

Jim Blair, who is directing the takeover bid, said WLR shareholders collectively lost about $66 million by not accepting the $30-per-share offer. Stock in the nation's ninth-largest poultry producer was trading at $19 a share before the offer and now is trading around $26 a share. The stock closed Thursday at $25.50 a share, down 25 cents from Wednesday.

``If WLR really cared about their shareholders it would remove all impediments and let them vote,'' Blair said outside the courtroom.

But WLR attorney Douglas Guynn told Michael that Tyson's portrayal as a defender of the Virginia company's shareholders ``is like the fox saying, 'Let me guard the chicken coop.' These people voted in overwhelming numbers and said, `No.' ... they weren't in it for the quick buck.''

Michael previously ruled that four WLR directors who owned a total of 1.4 million shares were eligible to vote in the May election. That gave Tyson only about 25 percent of the vote.

Guynn argued that the Virginia Control Share Acquisition Act is very similar to an Indiana law upheld by the U.S. Supreme Court in 1987. He said the Virginia Affiliated Transactions Statute resembles a Wisconsin law upheld by the 7th Circuit Court of Appeals in 1989.

The laws give a corporation's shareholders the rights to decide whether corporate raiders can have certain voting rights and restrict use of a company's assets to enact takeovers.

Attorney General James S. Gilmore III filed an opinion with Michael that asked him to sustain ``the entire Virginia statutory scheme regarding hostile takeovers.''

Farrell argued that taken individually, the Virginia laws are difficult to prove unconstitutional. But he said taken ``as a whole,'' they clearly violate federal law.

Guynn said a 1896 Supreme Court decision cited in the Wisconsin ruling gives states the right to ban mergers.

``Tyson is asking you to go where no other court has gone,'' Guynn told Michael.