Phillips Plan Sweetened to Thwart Icahn
In an effort to scuttle another takeover attempt, Phillips Petroleum Co. on Thursday added a sweetener to its restructuring plan designed to boost the value of the package to about $55 a share, the amount sought by New York financier Carl Icahn.
The unusually complex package, worked out by the firm’s investment bankers and approved by directors in a four-hour meeting Wednesday night, also sets up a procedure to ensure that shareholders will receive at least $62 a share for their stock in any takeover attempt. In a statement, the company said directors had also agreed to not oppose any cash offer of at least $62 a share for all of the stock in the Bartlesville, Okla., oil company.
No Response
Icahn had no immediate response to the Phillips action, and a secretary in his New York office said the investor would have no comment.
Icahn, who owns 7.5 million shares of Phillips stock, had vowed to launch a $55-a-share tender offer Thursday unless Phillips directors sweetened their recapitalization plan to provide that amount in cash and debt securities to all stockholders.
The recapitalization proposal, developed in late December to end an unfriendly takeover bid by Texas oilman T. Boone Pickens, would exchange 0.62 shares of Phillips stock and $22.80 in debt securities for each outstanding share of common stock. If the stock is trading at $49 a share on the date the exchange takes place, each stockholder would receive stock and debt valued at $53 for each of his shares.
The amendments announced Thursday provide for each stockholder to receive a dividend of $3.52 a share in the form of a new issue of preferred stock if the recapitalization plan is approved. Officials say that, when added to the original $53, this could provide stockholders the equivalent of more than $55 a share for their stock.
“This seems to put Phillips really in the driver’s seat,” said the money manager of an investment fund holding more than 1 million Phillips shares, who asked not to be identified. “Icahn and his allies are not going to be able to exert their will on the company now.”
The company’s announcement was greeted favorably by investors. Phillips shares rose 25 cents each to close at $50 in trading on the New York Stock Exchange. It was the most actively traded issue, with a 2.1-million-share block trading at $50.
Six-Month Moratorium
Meanwhile, Rep. Mickey Edwards (R-Okla.), whose district includes Bartlesville, introduced a bill in Congress that would impose a six-month moratorium on hostile takeovers of domestic oil companies by requiring approval of a company’s outside directors for any person to acquire more than 4% of the firm’s shares.
A policy statement adopted by the Phillips board said major oil companies should not “be liquidated or busted up for the benefit of speculators and corporate raiders,” a reference to fears that Icahn would sell off a number of Phillips assets if he acquired the company.
“The Phillips board intends to take all appropriate action to protect Phillips’ shareholders from abusive takeover tactics and being forced to accept questionable securities for their Phillips shares,” the statement said, adding that directors don’t believe that a “leveraged buy-out” of the company, in which assets are sold or mortgaged to finance repurchase of all of the company’s stock, is an “appropriate transaction.”
Directors also said the company is not seeking a “white knight”--that is, another company that would acquire Phillips on a friendly basis.
“The Phillips board believes that it is in the long-term best interests of its shareholders for Phillips to remain an independent company,” the statement said.
Although the restructuring plan now has a face value of more than $55 a share, Wall Street analysts have placed the real value far lower, arguing that the price of Phillips stock will fall sharply once the plan is in place.
