* Former CEO Palmer ran Rowan for three decades
* "Extremely concerned" by anti-takeover provision threat
SAN FRANCISCO, March 17 Rig contractor Rowan Cos Inc (RDC.N) is putting itself at risk of "destruction" by proposing to drop a rule designed to block hostile takeovers, according to the man who ran the company for three decades.
In a letter to shareholders on Wednesday, C. Robert Palmer said he was "extremely concerned" by a proposal to drop the rule requiring 80 percent shareholder support for any takeover by an entity already invested in the oil and gas rig company.
Palmer, who stepped down as chief executive in 2003, said that rule was put in place after an unsuccessful hostile takeover attempt in 1978, and the market capitalization -- now more than $3 billion -- has grown by 10 fold since then.
Recalling when the company had commissioned a book "The Legend of Rowan" in 1998, he believed its future remained bright.
"My major concern is that, if the safeguards available to deal with an unfriendly takeover are diminished, the sequel to the earlier book could be 'The Destruction of a Legend'," Palmer wrote in the letter, filed with U.S. financial regulators at the Securities and Exchange Commission.
Matt Ralls, who has now been Rowan's CEO for just over a year, said last month the company would try to rebase outside the United States as part of any deal in the coming years to expand its rig fleet. [ID:nN02110990]
Rowan shareholders will gather in Houston on April 29 for their annual meeting, and Palmer said votes against the proposed rule changes from investors holding about another 19 percent of the company would cause it to fail.
The former CEO, an employee for 43 years who holds about 1 million Rowan shares, said his keen interest in the company was evidenced by his previous letters to stockholders in the past three years and in 2005.
Rowan had faced pressure last year from activist hedge fund Steel Partners, which tried to steer the direction of the company because it felt it was undervalued, though Steel later reduced its stake and pulled its board member. [ID:nN31452123] (Reporting by Braden Reddall, editing by Leslie Gevirtz)