USX Stock Off as Rumors of Takeover Cool

USX Corp.’s stock slipped further Wednesday as Wall Street re-evaluated the takeover speculation that earlier drove the stock higher in extremely heavy trading.

USX’s common stock fell 37.5 cents a share to $22.875 in New York Stock Exchange composite trading after losing $1.875 a share on Tuesday.

The stock retreated after trading near $26 a share on Monday following a $5-a-share advance last week.

That advance came in hectic trading amid heightening speculation that USX might become a takeover target. The speculation was triggered Aug. 20 when Robert Holmes a Court, an Australian financier and takeover artist, said he planned to buy up to 15% of USX.

The speculation was fueled last week when, according to Wall Street sources, such prominent American takeover specialists as Carl C. Icahn, T. Boone Pickens Jr. and Irwin L. Jacobs also purchased stakes in USX.

No Filings With SEC

Analysts said the investors might not want to acquire USX but rather hoped to boost the value of their holdings by forcing USX to restructure or by flushing out a takeover bid for USX from another company.

None of the investors would comment, and none has informed the Securities and Exchange Commission that they own 5% or more of USX, as would be required by law.

USX, the Pittsburgh-based energy concern and parent of the nation’s largest steelmaker, nonetheless responded to the activity by announcing a 30-day study of possible restructuring moves aimed at boosting the market value of its stock.

USX also acknowledged that its stock was priced below the value of its assets, which analysts say is why the takeover specialists find it attractive.

USX did not identify which restructuring moves it would consider, but possible restructuring steps include a stock buy-back, the spinoff of USX’s oil and gas operations to stockholders and the sale of its USS steel division.

But USX did throw cold water on one possible move: a stock buy-back financed with surplus funds from its pension plans.

USX said the pension plans were little more than adequately financed and thus any surplus that might be recovered was not significant. That surprised some analysts who said USX itself previously said the plans were substantially overfunded, perhaps by up to $2.5 billion.

In any case, they said USX’s statement was aimed mostly at dampening the takeover speculation, and it was after that announcement that USX’s stock price and its trading volume began sliding.

The stock’s decline also came amid unconfirmed reports late Tuesday that Pickens had sold most or all of his purported USX stake. Pickens did not return a telephone call requesting comment on Wednesday.

Analysts Disagree

Money managers and analysts debated whether the stock’s pullback reflected selling by some investors simply cashing in on the stock’s run-up or whether it meant that the intensity of Wall Street’s expectations about a takeover or restructuring was ebbing.

Some professional takeover speculators, who agreed to discuss the matter on the condition that they not be identified, said that a restructuring was likely but that they doubted it would lift the stock much above its recent levels.

They attributed their forecast to weak energy prices, USX’s heavy debt load and severe weakness in its steel division, which also has been hit with a work stoppage since Aug. 1.

Alan L. Edgar, an oil analyst at the investment firm Schneider, Bernet & Hickman in Dallas, also estimated that USX would be worth little more than $25 a share if acquired or restructured.

“People looking at $30 (a share) or higher frankly haven’t fine-tuned the numbers,” Edgar said. “They got carried away, simple as that.”

However, Bruce E. Lazier, an analyst with Prescott, Ball & Turben, contended that the underlying value of USX’s assets was between $35 and $40 a share, and other analysts have made estimates of between $30 and $35 a share.

“I don’t think there’s any indication that the values that were there before (the stock price fell) have changed,” Lazier said, noting that when USX said its stock price undervalued the company’s assets, the stock was trading at $25.50 a share.

Lazier said the stock’s decline was a plus for potential suitors who also believe that USX’s potential value is much higher than its recent stock price, since they could now buy more shares at cheaper prices.

“If anything, these people want the stock to come back a little bit,” he said.