Your letter of December 5, 1983, to Governor Olson concerning the review of federal regulation of tender offers being conducted by the Subcommittee on Telecommunications, Consumer Protection, and Finance has been referred to me for reply.

To my knowledge, no one has ever proposed a general take-
over law for North Dakota comparable to those found in most
states. The reason seems to be purely and simply that there
are few North Dakota corporations which are considered to be
attractive targets. The one exception is domestic insurance
companies. Several North Dakota insurance companies have
been involved in take-over skirmishes, and the legislature
enacted a special, comprehensive body of law to deal with
perceived abuses in this area back in 1971.

Because your letter focuses on one area of the securities
marketplace that this office does not directly regulate, we
have virtually no experience and little expertise on which
to draw. Accordingly, it would be presumptuous of me to
comment on specific recommendations contained in the SEC
Advisory Committee report. However, I do offer the following
observation for the Subcommittee's consideration.

The socioeconomic impact of a take-over bid on a small state
like North Dakota can be dramatic. I have personally witnessed
the far-reaching effects when a New York based insurance
company took over a North Dakota insurance company a few
years ago and later closed down local operations and consolidated
them in its principal office in New York. From my desk in
the Capitol tower, I can still see a beautiful office building,
once teeming with activity and a source of local pride, now
vacant and for sale, formerly occupied by the domestic
company. I know the loss to the community, and I understand
the sense of abandonment and betrayal many feel.

The recommendations in the report are primarily concerned with the mechanics of tender offers. As important as the mechanics may be, I think this aspect of tender offers should be relegated to its proper place and that the Subcommittee should devote more of its effort to studying the broader economic and social issues involved.

I commend you for your approach to soliciting the views of
all interested parties in reviewing this complex issue.

State of Tennessee

January 23, 1984

LAMAR ALEXANDER GOVERNOR

The Honorable Timothy E. Wirth, Chairman
Subcommittee on Telecommunications,

Consumer Protection and Finance
Committee on Energy and Commerce
U.S. House of Representatives
Washington, D.C. 20515

Dear Tim,

This is in response to your letter of December 5 in which you asked that I participate in a comprehensive review of the adequacy of current federal regulation of Tender Offers.

I have asked my Cabinet to review and advise me their opinions on the recommendations of the Advisory Committee for the Securities Exchange Commission. Basically, the Cabinet agrees with their conclusions. In particular, it feels that the purpose of the regulatory scheme should be neither to promote nor deter takeovers. Such transactions and related activities are a valid method of capital allocation, so long as they are conducted in accordance with the laws deemed necessary to protect the interests of shareholders.

We do not agree with Representative Seiberling's legislation which would impose an additional waiting period for review and a "public interest" test to evaluate business combinations involving the largest American corporations.

Additionally, we agree with the second recommendation, in that there is
probably "no material distortion in the credit markets resulting from
control acquisition transactions, and no regulatory initiative should
be undertaken to limit the availability of credit in such transactions".
I therefore feel that credit control legislation is uncalled for.
The objectives of federal and state regulations of takeovers should not
favor either the acquirer or the target company, but there should be
sufficient regulation to protect shareholders and market participants
against fraud, nondisclosure of material information and the creation of
situations in which small shareholders may be at a disadvantage to market
professionals.

Federal or state regulations should not concern itself with the price
paid for a target company's share. Therefore, there should not be a
"fairness review" of the price paid by an acquirer.

In conclusion, we do not feel that additional regulation of Tender Offers

is necessary, and we believe the interests of the communities, the work

force and shareholders are best served in a free market economy. Government regulation, in many instances, complicates and confuses issues.

Thank you.

Sincerely,

Laman

Lamar Alexander

MARK WHITE

GOVERNOR

OFFICE OF THE GOVERNOR

STATE CAPITOL

AUSTIN, TEXAS 78711

January 30, 1984

Dear Tim:

Thank you for inviting my comments on issues relating to federal regulation of tender offers. I appreciate having this opportunity to participate in the comprehensive review you are conducting.

You may already be aware of the securities-related issues that surfaced during the Regular Session of the Sixty-eighth Texas Legislature, which adjourned on May 31, 1983. After extensive debate on proposals to adopt a full-disclosure system of state securities regulation, the Legislature passed a bill maintaining the existing merit regulation system.

This expression of legislative intent places the highest priority, as I think it should, on protection of stockholders and citizens. The additional questions that you and your subcommittee are asking about tender offers will assure that the rights of the stockholders are thoroughly considered in the review of federal regulation.

The North American Securities Administrators Association (NASAA), of which our State Securities Commissioner Richard Latham is president, provided a number of comments on ways to strengthen the proposed regulations to protect shareholders and insure their input into takeover attempts. Rather than repeat many of NASAA's points, let me simply emphasize an area I feel must be given more consideration: the effect of takeovers on local economies and jobs. My administration has worked hard to advance this state's economic development, to attract new jobs and companies to Texas and to diversify our economy. Takeovers that result in the closing of a productive plant or factory would be counterproductive to these efforts and serve neither the shareholder nor the citizen.

Finally, let me commend you for your interest in the problem of hostile takeovers, which generate much public distrust and disillusionment. By approaching the issue as you are, with comments from government and consumers, as well as business, I feel certain that the subject will receive the serious study it warrants.

Honorable Timothy Wirth

2454 Rayburn House Office Building

Independence Avenue & South Capitol Street S.W.
Washington, D.C. 20515

Dear Congressman Wirth:

Thank you for this opportunity to comment on the study being conducted by the Subcommittee on Telecommunications, Consumer Protection and Finance on federal regulation of tender offers. The impact of corporate takeovers on the capital market, and particularly a state's ability to assume a role in protecting and encouraging that market, is a very important and timely issue.

Utah has long been concerned with the eradication of abuses in the issuance and trading of securities. We recognize that tender offers have often been the instruments of such abuses. However, the United States Supreme Court cast a shadow over the extent to which a state may regulate tender offers involving local companies in the 1982 case, Edgar V. Mite Corporation. 102 S. Ct. 2629, 457 U. S. 624 (1982).

Certainly, the various remedial measures contained in the recommendations submitted by the SEC which your Subcommittee is addressing need to be examined in order to help clarify the Mite case. My primary concern, however, is that any remedial changes in federal securities law not tread upon state sovereignty in areas of legitimate state function. State corporation law is vitally linked to the success of local and regional economies and must not be subjected to preemption through the use of repeated piecemeal measures. Therefore, I can not subscribe to any solutions to the tender offer problem which encroach on the traditional right of states to regulate the internal affairs of local corporations.

As you are aware, governors adopted a policy position on this issue, which I fully support, during the February 1984 National Governor's Association meeting in Washington D.C. That policy position (attached) states in part:

"Concentrating authority to regulate tender offers with the Securities and Exchange Commission (SEC) and the erosion of state sovereignty ignores the state and local impact of corporate takeovers. Often it is a small or medium size company, locally based, which is the target of a takeover bid. State governments have a legitimate interest in protecting and promoting the interest of their citizens, including the owners and shareholders of local businesses, local economic interests and jobs. Centralized regulation of tender offers fails to recognize the regional character of such activity."

The policy position further states that:

"In order to curb tender offer abuses, protect investors and retain public confidence in the integrity of our economic system, it is necessary that there be dual, cooperative regulation of tender offers involving the states and the federal government. State authority to regulate tender offers has been diluted to the point where they can no longer adequately protect their citizens."

The North American Securities Administrator's Association (NASAA) has presented your Subcommittee with a list of those items contained in the recommendations which dilute or counter the maintenance of state sovereignty over corporate law. I agree with the NASAA's position regarding what role a state should assume in the regulation of tender offers. I also generally agree with the NASAA's comments on the other recommendations as well.

Again, I appreciate this opportunity to submit comments on the recommendations of the SEC Advisory Committee on Tender Offers. I will be following this issue closely as it progresses through your Subcommittee because of the importance of the takeover issue and our desire to ensure a strong and healthy Utah economy.