Phillips Plan Rejected by Stockholders : Oil Company Says It Will Begin Another Anti-Takeover Move
Phillips Petroleum Co. said Sunday night that shareholders apparently have defeated the company’s proposed restructuring plan, and it announced it would launch a new $4.5-billion attempt to avert a hostile takeover.
The nation’s eighth-largest oil company is being pursued by New York financier Carl Icahn, who has offered $8.06 billion in cash and securities for Phillips.
Edward Novotny, a spokesman, said Icahn could not be reached for comment on Phillips’ announcement.
One of the conditions for Icahn’s offer to proceed was that shareholders defeat Phillips’ plan, which was put together in December to escape another hostile takeover bid led by T. Boone Pickens, the chairman of Mesa Petroleum Co.
Voting Completed Wednesday
In the initial plan, Phillips offered to buy back 58.8 million shares of its stock with securities having a face value of $60 a share. It also proposed selling up to 39% of its stock to its employees--enough to block any unwelcome suitor under proposed new by-laws.
Voting on that plan was completed Wednesday at Phillips’ headquarters in Bartlesville, Okla., and results were to be released today.
In a statement issued in New York late Sunday, Phillips’ chairman, William Douce, said there was strong support for the plan. “However, it appears that the proposal did not get the approval of the majority of our total outstanding shares.” A vote count was not disclosed.
In its sweetened offer, Phillips said it would repurchase 72.5 million of its shares for securities with a value of $62 a share. It also said it planned to increase the dividend on its common stock from $2.40 a share to $3 a share and to issue $300 million in preferred stock to the holders of the remaining 73.1 million shares of Phillips common stock.
It also said it would seek shareholder approval for issuing more common stock so that it could issue three new shares for each share remaining after the stock buy-back. Phillips dropped plans for selling stock to employees but said it still planned to sell $2 billion of its assets.
Latest Proposal
Douce, in describing the company’s latest proposal, said: “Many of our shareholders wanted a different type of transaction, and our new proposal is designed to deliver the value we believe they want. It involves the exchange of a greater number of shares for securities having higher interest rates, permits shareholders to retain an equity interest, and keeps the company together as a vital, competitive entity.”
Phillips predicted earnings per share, which were $5.26 last year, would rise to $7.04 a share in 1985, $7.92 a share in 1986 and $10.28 in 1987, the company said.
Douce said Phillips believed that its offer “is clearly superior to the heavily conditioned scheme proposed by the Icahn group.”
Icahn now owns 4.85% of Phillips stock, or 7.5 million shares.
He has offered to buy another 70 million shares for $60 a share in cash if the Phillips plan were defeated and if financing could be arranged.
Begin New Offer Today
He has proposed retiring the remaining minority shares with securities valued at $50 a share if he is successful in dismantling Phillips’ elaborate takeover defenses.
Phillips said that it would begin its new offer today and that the terms of the securities that it will issue to buy back its stock “might preclude the type of takeover being pursued by Mr. Icahn.” It did not elaborate.
Under the settlement of the takeover attempt in December, Pickens and his group now have 30 days to decide if they will exercise rights to sell back their 8.9 million shares to Phillips for $53 a share, representing a pretax profit of $89 million.
They may seek to take Phillips up on its offer to exchange their shares for $62 in securities, but they would not be guaranteed that all of their stock would be repurchased.
In trading Friday on the New York Stock Exchange, Phillips stock closed at $49.375 a share.
