Study pinpoints U.S. companies susceptible to takeovers

Wed Apr 10, 2013 4:43pm EDT
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By Svea Herbst-Bayliss

(Reuters) - Corporate raiders take note: new research finds that financial services company Morgan Stanley and retailer J C Penney Co Inc are among the most vulnerable to hostile takeovers.

The two rank among the top 10 U.S. corporations where control is concentrated within a small group of large shareholders, putting the companies at greater risk of losing a potential hostile takeover bid, according to a report released on Wednesday.

Rotary Gallop, a Houston-based research and consulting firm, measured controlling influence rather than ownership stakes at 495 of the companies in the Standard & Poor's 500 index.

Morgan Stanley and J C Penney were not immediately available for comment.

"What matters is how much control shareholders have in a company, not ownership - the traditional yardstick in contested situations," said Travis Dirks, a trained physicist who is now Rotary Gallop's chief executive.

"Until now it was more of a gut feeling," he said, referring to the traditional method used by pundits of handicapping proxy contest outcomes.

Companies with a high "RG Whale Score" would be in danger of losing in a hostile bid because outsiders would have fewer owners to convince to vote with them and accept a deal, he said.

Separately, "RG Shark Scores" show a company's potential vulnerability to activists winning a proxy contest over corporate governance or other matters. The report lists Wisconsin Energy Corp and Fifth Third Bancorp as vulnerable to "sharks."   Continued...

The headquarters of Morgan Stanley is pictured in New York January 9, 2013. REUTERS/Shannon Stapleton