Simmons Gets 5.3% Lockheed Stake : Filing to SEC Hints Dallas Group May Try to Get Control

A group led by Harold Simmons, the Dallas-based financier, said today it had acquired a 5.3% stake in Lockheed Corp. and may seek control of the company, the eighth-biggest military supplier.

In a filing with the Securities and Exchange Commission, Simmons’ group said it had been buying shares to acquire a significant equity interest and would review its stake continuously.

“While the reporting persons do not currently have any plans to acquire control of the company by stock ownership or otherwise, they may consider seeking control of the company in the future,” the filing said.

Lockheed, headquartered in Calabasas, Calif., has long been a rumored target for a takeover or restructuring because of the depressed price of its stock relative to the value of its assets, financial analysts have said.

In a March 31 letter to Lockheed Chairman and Chief Executive Officer Daniel Tellep, Simmons said he viewed Lockheed as well-managed.

“We have no plans, or desire, to disrupt management. We expect to be a constructive, long-term shareholder,” he said in the letter, a copy of which was included in the SEC filing.

The Simmons group said it purchased a total of 2,467,200 shares from Jan. 31 to March 29 at prices ranging from $43.50 to $49 a share. The recent purchases brought the group’s total stake to 3,147,800 shares, or about 5.3% of Lockheed’s outstanding common stock.

Lockheed makes defense systems, propulsion and military aircraft and electronics equipment.

The company won $3.53 billion in military contracts in fiscal 1988, making it the Pentagon’s eighth-biggest supplier, according to figures released by the Defense Department last month. That was down from fourth place in the year-earlier period, when it won $5.57 billion in prime contracts.

The company had no immediate comment on news of the Simmons stake. Lockheed’s stock was trading up $2.75 at $49.50 a share on the New York Stock Exchange by early afternoon.

Simmons is chairman and chief executive officer of Valhi Inc., a diversified holding company he has built up by identifying undervalued companies, taking them over, liquidating their unprofitable assets and retaining the rest. He now has interests, through subsidiaries, in chemicals, oil services, refined sugar, forest products, fast food and hardware products. Valhi earned $85.9 million on sales of $2.30 billion last year.

Simmons had said in December that Valhi owned $15 million worth of Lockheed’s shares and that he was considering boosting his stake.

Lockheed is involved in many large defense projects, including production of the Trident I and Trident II missiles, the P-3 anti-submarine aircraft and the C-130 and C-5 cargo aircraft. It is also home of the so-called “Skunk Works” where the high-flying U-2 reconnaissance plane as well as high-speed jets were developed.