Pickens May Seek to Sell Shares Back to Unocal
Four days away from his showdown with Unocal Chairman Fred L. Hartley, Mesa Petroleum Chairman T. Boone Pickens Jr. said Thursday that he will follow his own advice and offer to sell back his group’s Unocal stock for the proposed $72 a share unless a court derails the offer first.
But he denied that choosing the Unocal offer when his own competing bid is still on the table is proof that he is throwing in the towel, a charge made by Hartley Wednesday and reported in The Times on Thursday.
“We are firmly committed to our objective of acquiring Unocal Corp.,” Pickens said. To back up his assertion, Pickens said his group will adjust “the price and other conditions” of its offer for Unocal if Unocal completes its own, more lucrative offer, which is available to all Unocal shareholders except the Pickens group. Pickens is challenging that exclusion in court.
He did not say how he will alter his offer. But there is growing speculation that he will come back with an offer for more shares but less money for each share. He is currently offering to pay $54 apiece for 64 million shares, which, when added to his current Unocal holdings would give him majority ownership.
Meanwhile, Hartley made his strongest commitment yet to go ahead with Unocal’s offer for 50 million shares even if it loses in court. “If the court decides he (Pickens) must be included . . . , he will just go into the pool” of other shareholders who have tendered their stock, he told reporters.
But a Unocal spokesman said that Hartley has not changed his often-stated position that he would not buy out Pickens for a premium.
Hartley also said Thursday that he hasn’t spoken with the Pickens group “in any way, shape or form” and has no plans to.
Some securities analysts were predicting Thursday that Pickens and Hartley will settle their dispute out of court before the Unocal annual meeting, currently scheduled for Monday.
Both sides Thursday continued to claim that they are winning on the issue of postponing Unocal’s annual meeting. Pickens’ proposed postponement for as long as 60 days is considered critical to his cause because without it he is prohibited from adding to Unocal’s annual meeting agenda. With that restriction, even if Pickens gained control of the company, he could be stuck for an entire year with an opposing board until it came up for reelection.
Hartley said he will win easily, and Mesa Chief Financial Officer David Batchelder said “the institutions are voting heavily for adjournment.” About 40% of Unocal’s stock is held by institutions.
Despite Pickens’ vow to continue his pursuit of Unocal, his decision to tender to Unocal “didn’t do anything for his credibility,” said David Ullom, an energy analyst with Bateman Eichler, Hill Richards in Los Angeles.
The decision, coupled with a preliminary court ruling on the takeover battle, also aggravated the confusion that has marked this corporate war from its April 8 beginning. Shareholders have been besieged with offers, counteroffers, prospective offers and lawsuits, and even sophisticated arbitrageurs and securities analysts admit to some confusion.
“Everybody is posturing right now . . . and it’s all very confusing,” said Gilbert Schwartz, research director for the investment firm of A. R. Schmeidler & Co. in New York. “About the only thing you can say with any certainty is that it’s probably not going to go away. These things tend not to disappear into a void.”
About 4.9 million Unocal shares changed hands Thursday in trading on the New York Stock Exchange, making it the most actively traded stock. The price fell $1.50 a share to close at $46.125.
Some on Wall Street were interpreting Pickens’ comments as the first step in an effort to bow out gracefully. Others dismissed his decision as the only smart thing to do, comparing that part of the battle for control of Unocal to a mere skirmish in a large-scale war.
There was also some confusion about the importance of a preliminary ruling in U.S. District Court in Los Angeles. Judge A. Wallace Tashima delayed until today his decision on whether to enjoin Mesa from voting its proxies at Monday’s scheduled annual meeting and on whether to grant Mesa’s request to delay that meeting at least 30 days. But in a preliminary ruling, Tashima did indicate that there is merit in both sides’ accusations, a comment that led some analysts to believe that the annual meeting will be delayed for a few days and others to say that Pickens is in trouble.
“We’re in the sixth inning, and Hartley’s winning 6-2,” said Lawrence Garshofsky, a Los Angeles arbitrageur who owns Unocal shares.
