USX Will Consider Restructuring as a Possible Defense

Times Staff Writer

USX Corp., responding to widespread reports that four celebrated corporate raiders have targeted the struggling giant, said Monday that it is studying a range of defensive measures, including a possible restructuring.

But the announcement did little to curb investor activity. The company’s stock was by far the most active in New York Stock Exchange composite trading on Monday with 13.56 million shares sold. USX closed at $25.125 a share, unchanged from Friday’s closing price.

The Pittsburgh-based steel and energy conglomerate has hired two investment banking firms, Goldman, Sachs & Co. and First Boston Corp., to develop within 30 days a strategy to fend off any hostile takeover attempts, officials said.

While the company--formerly called U.S. Steel--said it was looking into a wide range of “restructuring alternatives” and agreed that its stock remains undervalued, company officials refused to comment on whether the firm might consider selling some of its troubled steel operations in order to increase its stock price.


The company’s steel division has been shut down by a nationwide labor dispute since Aug. 1. USX’s troubles in steel have generally been blamed for depressing its stock so much that its oil and gas holdings have become tempting bargains for raiders seeking control or seeking to buy some of USX’s energy assets.

The company’s statement on Monday was its first official response to reports that four well-known corporate raiders--Texas oilman T. Boone Pickens Jr., Minneapolis investor Irwin L. Jacobs, Australian Robert Holmes a Court and Trans World Airlines Chairman Carl C. Icahn--have all acquired significant stakes in USX.

In an interview on Monday, Jacobs acknowledged that he has been buying USX stock but refused to say how much he has already purchased. He also refused to comment on whether he plans to file a statement with the Securities and Exchange Commission, which would be required if he acquires more than 5% of the firm’s 257 million shares.

Icahn, who reportedly has purchased nearly 5% of USX, could not be reached for comment, but Holmes a Court has said he plans to acquire up to 15% of USX.


Meanwhile, David Batchelder, president of Mesa Petroleum Co., Pickens’ company, refused to comment on Wall Street speculation that Pickens, who has reportedly acquired about 3%, was working with Holmes a Court in a joint USX bid.

Attracted by USX’s undervalued oil and gas assets, as well as by its overfunded pension plans, the raiders have apparently been buying up huge blocs of USX stock over the last few days.

Some of the biggest USX trades were handled by Bear, Stearns & Co. on Monday, Wall Street sources said, while Friday’s big blocks were moved by Jefferies & Co. of Los Angeles.

Jefferies was less involved Monday, according to President Frank Baxter.


Analysts said Monday that it was still unclear what moves USX might take. Charles Bradford, steel analyst with Merrill Lynch, noted that USX’s statement insisted that the company could not tap into a huge pool of excess cash--estimated at between $2 billion and $2.5 billion--from its pension funds.

The claim seemed designed to prove that the company has fewer potential assets to be gained in a hostile takeover, Bradford said.

“I think they are trying to confuse the issue to make it more difficult to buy the stock,” Bradford said. “On the one hand, they come out and say the stock is undervalued, but then say the pension fund isn’t worth as much.”