Newhall Hid Takeover Inquiries From Unit Holders, Lawyer Contends

Several takeover artists have inquired about the possibility of buying Newhall Land & Farming, but Newhall did not disclose the inquiries before its unit holders approved management-supported takeover defenses earlier this week, a judge was told Friday.

William S. Lerach, a lawyer for several dissident unit holders who have filed a class-action lawsuit against Newhall to overturn the anti-takeover measures, said financiers Roy E. Disney, Robert M. Bass and the Belzberg family of Canada had made “expressions of interest” about acquiring Newhall, a Valencia-based land developer.

Lerach, appearing before Los Angeles Superior Court Judge Barnet M. Cooperman, said “the unit holders certainly should have been aware of these overtures” before voting on the anti-takeover measures and that the vote was illegal because of “misrepresentation and non-disclosure” by Newhall.

Nonetheless, Cooperman denied Lerach’s request for a preliminary injunction that would have temporarily kept the new anti-takeover rules from going into effect while the dissidents’ lawsuit progresses. The dissidents contend that the new rules will entrench management and prevent the investors from receiving a higher price for their units via an acquisition.

But Cooperman said no state or federal law appeared to have been broken and that there had been “full opportunity for unit holders to question” the proposals before the vote.

Newhall President Thomas L. Lee, who attended the hearing, said afterward he “was pleased” with the ruling but would have no other comment because of the lawsuit.

Spokesmen for Bass and Disney said that, as a matter of policy, they do not comment on reports of their investment activities. Representatives of the Belzbergs did not return a reporter’s telephone call.

Newhall, which owns 123,000 acres of land and is developing the community of Valencia, is organized as a master limited partnership whose units are publicly traded. Although no formal offer for Newhall has been disclosed, the partnership proposed the new rules to prevent a hostile takeover, and the unit holders approved the measures at a special meeting Monday.

The exact vote tally has not yet been announced by Newhall, but Lerach said each of the five management-proposed measures drew less than 55% of the total vote. “A very small shift of a few votes would have defeated these proposals,” he said.

The new rules, among other things, require that 75% of Newhall’s 19.8 million units be voted in favor of a hostile takeover or to remove Newhall’s management, up from the 50.1% majority vote now in place.

In its proxy statement for the meeting, Newhall noted that its officers and directors, which include some Newhall family members, own 20.7% of the units and therefore--if the new rule passed--they would need an additional 4.4% of the units to block an unwelcome merger.

But Lerach said the proxy material failed to note that other descendants of the Newhall family own an additional 16.1% of the units. If they voted with management, he noted, Newhall would be able to block all offers under the new rules.

Jim Schropp, one of Newhall’s outside lawyers, told Judge Cooperman that the company “has no reason to think” the 100 or so Newhall descendants would support management as a group. But Lerach asserted that 99% of the Newhall family members voted with management in favor of the anti-takeover measures.