In a second lawsuit filed this week to prevent future legalroadblocks, Royal Dutch Shell Group is asking a federal court todeclare that its tender offer to take over Denver-based BarrettResources Corp. complies with the regulations of the Securities andExchange Commission, and that Barrett may not file a lawsuit on anymerger-related issues except in the Delaware courts, where Barrettis incorporated.

In response Wednesday, Barrett’s board of directors amended thecompany’s bylaws to remove “certain long-standing provisions”relating to the ability of shareholders to take action by writtenconsent. The deleted provisions required 60 days’ advance noticefor the nomination of directors by written consent and prohibitedshareholders from amending the bylaws without convening ashareholder meeting.

Shell, which launched a formal hostile takeover of Barrett lastweek, said in its lawsuit that it expects the independent to blockthe $55 per share cash tender offer because the bid does not complywith SEC regulations (see Daily GPI, March 12).

Shell, 100 times larger than Barrett, has offered $1.8 billionfor Barrett, and with its rejection, is making good on a threat tocarry its offer directly to Barrett’s shareholders. Shell said itsbid represented the “full and fair value” of Barrett, which was 24%higher than its closing price on Feb. 28 of $44.25. On Tuesday,Barrett’s stock closed at $61.46.

In the lawsuit, Shell wrote that “plaintiffs believe Barrettwill seek to delay and defeat the tender offer through a meritlesssuit claiming that public disclosure filings.violate applicablefederal securities laws and regulations.” Shell’s cash tender offeris contingent upon an agreement by the Barrett board of directorsto not apply the poison pill defense, the shareholders’ rights planthat doubles the number of shares the buyer must acquire, therebymaking the bid more expensive.

In the first lawsuit filed by Shell, the energy giant isattempting to preempt Barrett’s poison pill defense by asking theDelaware Court of Chancery to revoke Barrett’s bylaws restrictingshareholders’ rights to vote by written consent. Shell told thecourt that Barrett’s bylaws are illegal and an improper barrier toits takeover bid.

Shell’s acquisition of Barrett would give it an edge in thegas-rich Rocky Mountain basin, where most of Barrett’s assets are.However, Barrett shareholders believe the company is worthconsiderably more than Shell’s initial offer, and on Monday, theboard authorized opening its data rooms to attract other buyers(see Daily GPI, March 13).

Yesterday, Barrett CEO Peter A. Dea said the board was lookingfor “proposals from a number of qualified parties,” and said thebylaw changes announced are “shareholder friendly and consistentwith our focus on maximizing shareholder value.” He said Barrettwould continue to “urge the company’s shareholders to take noaction with respect to their holdings of Barrett until the boardhas rendered a formal recommendation with respect to the Shelloffer as required by law.”

When it formally turned down Shell’s offer this week, theBarrett board announced it had “reviewed, considered and rejectedthat proposal, and said it “will take all necessary steps tomaximize shareholder value and that it had directed management topromptly pursue strategic alternatives, including seeking proposalsfrom a number of qualified parties. That process has alreadycommenced.

“In light of Shell’s formal commencement of a tender offer at$55 per share, the board of directors of Barrett will meet toformally consider the Shell offer and make a recommendation toshareholders with respect to the offer within 10 business days.Until such time, the company urges shareholders to take no actionwith respect to their holdings of Barrett.”

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