Mesa Offers to Cooperate With Unocal on Securities

The partnership led by Texas oilman T. Boone Pickens offered Thursday to cooperate with Unocal’s board of directors in determining the value of securities that the investor group would issue in its attempt to take over Unocal.

Pickens’ Mesa Partners II investor group said in a letter to the Unocal board that it is “prepared to agree” to have an independent investment banker chosen by both firms determine if the securities are worth $54 per share, as Mesa has said.

Mesa Partners is trying to take over the Los Angeles-based parent of Union Oil by making a $54-per-share cash bid for 64 million Unocal shares, followed by an exchange of securities worth $54 for each remaining Unocal share.

Unocal is attempting to block the Mesa Partners offer with one of its own that would exchange the remaining 87.2 million shares for senior notes worth $72 per share. Unocal said it made the offer, which would be completed only if the Mesa tender offer is successful, to give shareholders an opportunity to exchange their remaining shares for a fair value.

Mesa Partners said it offered to work with the Unocal board to clear up “what you claim are the uncertainties of our second-step transaction.”

“Under the circumstances, we request that you examine your poison-pill action, which we believe is not only unwarranted but also illegal,” the letter said.

A Unocal spokesman declined to comment on the letter.

Analysts have said the Unocal exchange offer was a hard blow to the Pickens group, but a Mesa spokesman said the partnership intends to continue its pursuit of Unocal.

“We’re not going away--we have $1 billion invested,” said David Batchelder, financial vice president of Mesa Petroleum, the Amarillo, Tex.-based oil company headed by Pickens that owns 90% of Mesa Partners II.

Pickens on Thursday ruled out sweetening his bid for Unocal.

“We’ve got a fair offer, so why raise ourselves,” Pickens said during a speech in Houston.

Batchelder acknowledged that some of the 139 investors backing the Mesa group’s bid for Unocal had been “confused” by the Unocal offer but were contacted Thursday and “they’re fine, their commitments are firm.”