Texas Oil Firm OKs Merger With Mesa
Pioneer Corp. said Thursday that it has agreed to be acquired by Mesa Limited Partnership, an energy concern headed by Texas oilman T. Boone Pickens Jr.
The proposal accepted by Pioneer, which like Mesa is an oil and natural gas company based in Amarillo, calls for Pioneer’s stockholders to receive 1.84 newly issued units of Mesa Limited Partnership for each of their shares, or a total of 61 million units. The units would give their holders certain rights to receive cash pay-outs from Mesa Limited’s operations.
Pioneer’s common stock edged up 12.5 cents a share to close at $21.125 in New York Stock Exchange composite trading, while the price of Mesa Limited’s units on the NYSE rose 12.5 cents to finish at $13.375.
Officials of both companies declined to estimate the current market value of the transaction. But, based on the closing price of the publicly traded Mesa Limited unit and multiplying that by the 1.84 units to be exchanged for each of Pioneer’s 33.2 million common shares outstanding, the deal would be valued at about $24.60 a share, or $816.7 million.
However, it’s possibile that the issuance of 61 million new units could dilute their market value.
The proposal is subject to approval by holders of two-thirds of Pioneer’s common stock and by the holders of a majority of the units in Mesa Limited that currently are eligible for voting.
By reaching the agreement with Mesa, Pioneer sidestepped a rival bid from Minneapolis investor Irwin L. Jacobs, who leads a group that already owns 14% of Pioneer’s stock. Jacobs had offered $23 for each of the remaining shares, or about $657 million.
Jacobs was not in his office, a secretary said, and the investor did not return a telephone message seeking comment.
Mesa Limited Partnership was formed late last year from most of the assets of Mesa Petroleum Co., of which Pickens is chairman.
“Pioneer has substantial long-life natural gas reserves in areas that are complementary to Mesa’s operations,” Pickens said in a statement. “The combined entity will have net proved reserves in excess of 2 trillion cubic feet of natural gas equivalent.”
