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Barnett adopts "poison pill' buyout defense

Barnett Banks Inc. said it bolstered its defenses against a potentially hostile takeover, adopting a shareholders' rights plan or "poison pill." The poison pill, approved by directors of the Jacksonville-based banking company, Florida's biggest, would have the effect of doubling the cost of buying Barnett if it were attacked by an unfriendly suitor.

Barnett's stock, like those of many regional banking companies, has been under pressure, making the company skittish about possible takeovers.

The poison pill, an elaborate legal and financial device designed with the advice of First Boston Corp., a New York investment banking firm, does not prevent a takeover, said Barnett spokesman Russell Hoadley. "It doesn't protect against a fully priced, fair offer to all shareholders," he said. "All it does is provide the board of directors time to consider and deliberate what is in the best interests of our shareholders."

Hoadley said the plan was not adopted in response to an existing or pending takeover bid.

The plan involves giving existing shareholders the right to buy additional Barnett shares. Each Barnett share would receive one right on March 12 to be used to buy a new issue of preferred stock. The preferred stock has the same value as a share of Barnett's common stock.

Barnett's board can trigger the poison pill if an unfriendly buyer holds more than 20 percent of Barnett's stock and appears poised for an hostile bid. Instantly, the amount of Barnett stock would double from its current 63.1-million shares outstanding.

The plan will remain in force for 10 years.

Barnett joins hundreds of other major companies,including others in Florida, that have adopted similar defenses. Last fall, Southeast Banking Corp. of Miami also adopted a poison pill. It, too, was not threatened with a hostile bid.

But Southeast regional banking companies are feeling nervous these days. During the past few months, regional banking companies have seen their share prices beaten down by a stock market worried about potential problems from real estate loans.

Barnett, in particular, has come under investor pressure because of its heavy lending to real estate developers, although it has so far managed to avoid any serious losses.

Investors also have reacted to federal bank examinations under way at Barnett and other major Florida banks, including First Union National Bank of Florida of Jacksonville, First Florida Banks Inc. of Tampa, and Southeast Bank. Examiners are paying special attention to real estate lending and how well banks manage these loans when they fail to perform.

Recently, Barnett's share price hit a one-year low of $29.87{. In trading on the New York Stock Exchange Wednesday, Barnett's stock closed at a price of $32.37{, down 37{ cents a share.

At current price levels, Barnett's stock has a total value of $2-billion. NCNB Corp. offered $2.4-billion for all the stock of Citizens and Southern Corp. of Atlanta in an unsuccessful takeover attempt last spring.

Although NCNB failed, C&S found security through a merger with Norfolk, Va.-based Sovran Financial Corp.

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