Tektronix readies for board fight; investor group may trigger poison pill?

Electronic News, Oct 26, 1992 by Jeff Dorsch, Daniel Holden

Investor Group May Trigger Poison Pill?

WILSONVILLE, ORE.--Tektronix scheduled a special shareholders meeting sought by an investor group holding nearly 14 percent in the company. Tek's 10-member board also limited the agenda for the Dec. 17 meeting, where the investor group seeks to name three board members, but while complying with the request, Tek said it would activate the "poison pill" provisions of its shareholder rights plan if the group purchases any additional Tek shares.

The investors are usually referred to as the Soros group, due to the involvement of New York investor George Soros. P.C. Chatterjee, a principal of Soros Fund Management, is spearheading the effort and is expected to be a nominee to the Tek board.

Via procedural rules the Tek board ostensibly is trying to block Soros-proposed nominees from becoming directors. "The meeting will be held for certain purposes specified in the group's request, including amending the bylaws of the company to provide that the number of directors be fixed from time to time by action of the shareholders. No other matters will be permitted to be brought before the meeting," a Tek statement said.

"While the Soros group's request for a special meeting purported to provide for the election of directors, the request neither set forth that the purpose of the special meeting is to fix the number of directors pursuant to the proposed bylaw amendment if adopted nor identified nominees for election. Consequently, directors could not be elected at such special meeting as no vacancies on the board are anticipated."

The Soros group's reaction could not be learned by presstime.

Tek executives had been scheduled to face security analysts in New York last Monday, but the appearance was cancelled several weeks ago due to what a Tek spokeswoman called a "scheduling conflict."

Mr. Chatterjee has reportedly been instrumental in the sale of two companies--Foxboro and Pansophic Systems--after gaining seats on their boards. In the case of Pansophic, Mr. Chatterjee also acted as broker in the sale to Computer Associates, and at least two other companies have also been sold while under the control of the Soros Fund since 1988.

Soros also owns large blocks of stock in Perkin-Elmer, Beckman Instruments and other businesses. Tek and Beckman have reportedly signed Goldman Sachs to assist them in devising defense strategies against Soros; Perkin-Elmer recently agreed to merge with Applied Biosystems.

Insiders said if Mr. Chatterjee gains a seat on the board, he may seek to break up the company and sell operational divisions separately. Mr. Chatterjee has said he only wants to get a seat to gain information on Tek's operations.

Prudential Securities recently estimated the "break-up" value of Tek at approximately $25 a share, or about $765 million in total. "We caution that the swing factor on the break-up valuation, however, lies with the Test & Measurement segment of the business," Prudential wrote. "This is a mature, declining business that represents 55 percent of the company's revenue. Thus, we can only speculate as to what the selloff value of this segment might be, adding more uncertainty to our valuation estimate."

Tek's core T&M revenues declined 4 percent in both the fiscal year ended May 30 and Q1 ended Aug. 29. Prudential still rates Tek stock as a "hold." Last week, the common shares were trading at around $21 a share.

Tek's net income fell to $4.9 million on revenues of $1.3 billion for the fiscal year ended May 30, compared with net of $14 million on revenues of $1.37 billion in fiscal 1991. In Q1, net was down fractionally compared with a year ago, to $9.5 million, while revenues rose slightly, to $304.6 million.

In the last two years, Tek has added two outside directors--executives from Xerox and Dow Corning--to its board, while Tek's former chairman, Robert Lundeen, retired from the board a year ago. He was a former Dow Chemical chairman.