A lot can change in a couple of weeks, can't it? When we last looked at transportation services company Greenbrier (NYSE:GBX), the company's adoption of a shareholder rights plan -- commonly known as "poison pills," such plans are a common defense against hostile takeovers -- didn't even rate a mention.
Perhaps that was an oversight. While the company said at the time that it wasn't adopting the plan in response to any stated acquisition interest (they're also used in the case of investors acquiring sizable stakes on the open market to keep them from obtaining control the board doesn't want to cede), the move nevertheless touched a nerve of Chairman Alan James'. In a rare move, the chairman on Monday announced a lawsuit against the company and the rest of its board, alleging that the plan was "bad for public shareholders and demonstrates poor corporate governance."
Generally speaking, investor support (or lack thereof) is usually a proxy for a vote of confidence in management: If you're for the plan, you might not want a hostile buyer trying to muscle your company around. If you're not, meanwhile, you might think things need some shaking up -- or, at least, you don't want the company to be able to push away activists or potential buyers. Now we know how James feels.
It's not so simple, however. James owns nearly 30% of the company. He's been chairman since the company went public in 1994. He's been associated with Greenbrier in some form for 30 years. James and CEO William Furman, meanwhile, had a deal -- it just expired -- in which they agree to vote their shares together "to elect each other as directors and with respect to all other matters put to a vote of the stockholders." (Furman also owns about 30% of Greenbrier.)
Greenbrier, whose board voted 6-1 in favor of the plan, is sticking to its guns. James, for his part, says he'll go with prevailing opinion if the matter is put to a stockholder vote. All told, Greenbrier investors -- whoever they might be, since as of last October some three-fourths of the company was owned by directors, officers and two investment firms -- must be a little confused at the current state of things.
Something, however, would seem to be up. On the surface, Greenbrier doesn't look like a classic takeover target -- not with its strong financial position, solid business, hot stock, and ownership largely tied up in two individuals. But the new plan apparently prohibits either Furman or James from increasing his stake without triggering the poison pill; investors have to wonder what, exactly, is going on in the offices upstairs.
Volume in the shares has ticked upward slightly since this news broke, perhaps suggesting that some think there's more to this than a simple difference of opinion.
Fool contributor Dave Marino-Nachison doesn't own shares of Greenbrier.
