Mcdonnell Heir To Vote Against Boeing Deal Will Cast 7.65 Million Shares Against Because The Mcdonnell Name Won’t Be Included In The New Company

The namesake of McDonnell Douglas Corp.’s founder and the company’s biggest single shareholder says he will vote against the aerospace giant’s merger with Boeing Co.

James S. McDonnell III says he plans to cast 7.65 million “no” votes because his family’s name will be absent from that of the combined company.

His opposition alone is not enough to block the merger, which the companies hope to complete Aug. 1.

He was the lone dissenter last December when the company’s board voted to enter into the deal, which would combine the world’s top military aircraft maker with the world’s top commercial aircraft maker.

McDonnell Douglas disclosed his objections for the first time Friday in a proxy statement filed with the Securities and Exchange Commission.

The deal is still subject to approval by antitrust regulators in the United States and Europe, as well as by shareholders of both companies.

At least two-thirds of McDonnell Douglas’ shares represented at the special meeting on July 25 must be voted in favor of the merger for it to proceed.

Boeing also needs a simple majority vote from its shareholders at a meeting the same day.

James McDonnell controls three other large chunks of stock, as a trustee in two family charitable trusts and as a director in one foundation. His younger brother, Chairman John F. McDonnell, is co-trustee of the charitable trusts.

They share responsibility for the foundation with a third director, whom the company did not identify.

The shares that James McDonnell owns out-right represent 3.64 percent of the company. When the trusts and foundation are included, he controls 9.84 percent of the stock.

The shares in the trusts must be voted as a bloc, McDonnell Douglas said in the proxy statement. If the trustees are unable to agree whether to support the merger, the effect will be a ‘no’ vote for each of the shares.

However, the trustees also are required to meet certain fiduciary duties to the organizations. Rejecting the merger, which could trigger a drop in McDonnell Douglas’ stock price, could run counter to those duties.

McDonnell Douglas said in the proxy statement that its board preferred that the McDonnell name be joined with the Boeing name in the new corporation.

The board believed that doing so “would support the intention of the companies that the transaction be perceived as a merger and not a takeover, and would have a more favorable impact on McDonnell Douglas employee morale.”

The majority of the board eventually agreed to a compromise proposed by Boeing: feature the McDonnell name prominently on the military side of the business.

James McDonnell, though, was not persuaded. The company said his objection “resulted from his desire … to preserve and maintain the benefits of the rich heritage and history of both companies and in tribute to James S. McDonnell and Donald W. Douglas, the founders of McDonnell Douglas.”