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Executive Summary

RORER CHAIRMAN ECKMAN ASKS CONGRESS FOR MORATORIUM ON HOSTILE TAKEOVERS in April 3 testimony before the House/Judiciary/Monopolies Subcmte. At a hearing to consider legislation concerning acquisitions and tender offers, Rorer Group Chairman & Chief Exec John Eckman said: "An effective means must be found to deter hostile, coercive, and abusive takeover methods, and to remove incentives for opportunistic raiders, while not preventing corporate combinations that strengthen business operations, and that are effected by means that are fair to all shareholders . . . As the best means of achieving such legislation, we strongly endorse the bill introduced by [subcmte. chairman Rodino (D.N.J.)] providing for a moratorium on hostile takeovers." Eckman maintained "there is probably no other way" than a moratorium "that fair and effective legislation can be developed. A rush to achieve some legislation in the midst of competing economic and regulatory interests will not result in anything but a piecemeal and stop-gap approach to an increasingly serious problem." He added that a legislative moratorium would provide a cooling-off period while Congress examines possible changes in the tax codes and enforcement policies. Rodino's legislation (HR 1831) would establish a study commission to examine current laws, current business practices, and legislative options over a two-year period during which a moratorium would be placed on hostile takeovers. Rodino maintained that "consumers, employees, and stockholders are all best served if management is able to focus on its primary task: maximizing a firm's income potential through innovation and investment in areas in which the firm has expertise." Eckman contended that current laws are contradictory. "On the one hand our tax laws seek to reward research and capital investment for the long-term good of the economy; on the other hand, our tender offer laws and antitrust and securities law enforcement policies discourage investments in both research and capital equipment by forcing management to maximize short-term profits." Banks, he continued, "fall all over themselves to lend capital to finance takeovers, removing equity from capital markets." Separately, in an April 4 letter urging Rorer shareholder opposition to Cooper's proxy solicitation, Eckman was sharply critical of Cooper Chairman Parker Montgomery. The four page letter includes allegations that Montgomery and Cooper officers regularly borrow large sums from Cooper Labs at low interest. In addition, the letter alleges that the Cooper officers attempted to reap a $30 mil. profit from the sale of CooperVision to Nestle in ways not available to other CooperVision shareholders.

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