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Beverly Is Dealt Setback in Effort to Reincorporate

May 09, 1987

A bid by Beverly Enterprises to deter corporate takeovers was handed a setback Friday when the company failed to get the shareholder votes needed to approve a reincorporation of the nursing home company in Delaware.

Robert Van Tuyle, chairman of the Pasadena firm, said Beverly adjourned its annual meeting until May 29 to allow shareholders--who must personally vote on the reincorporation--more time to mark their ballots. He said the company, the nation's largest nursing home operator, had received an abnormally high number of abstaining votes because many brokers had been unable to reach their clients.

The reincorporation is the centerpiece of an anti-takeover plan. As part of that plan, Beverly intends to repurchase up to 10 million share of its common stock in order to boost the value of shares outstanding. But since state law makes such repurchases difficult for companies incorporated in California, the firm is seeking the change to Delaware. Beverly would still maintain its headquarters in Pasadena.

Van Tuyle said that, so far, 47% of the company's shareholders have approved the reincorporation, with 18% abstaining and 6% voting against the proposal. Reincorporation requires approval from at least 50% of all shareholders.

In another anti-takeover move in December, Beverly issued a block of preferred shares with separate voting rights. But that action has been challenged by the New York Stock Exchange, which has notified Beverly that it may delist the company's common stock. The NYSE is waiting for the Securities and Exchange Commission to rule on the issue of disparate voting rights before it acts against Beverly and 42 other companies that have issued different classes of stock with separate voting rights.

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