Merger Scheduled for Next Year : Huntington Beach Co. OKs Latest Offer, Chevron Says

Chevron Corp. said Tuesday that a sweetened $80-million offer for the remaining one-third of Huntington Beach Co. has tentatively been accepted and a merger of the two oil and land-development companies is scheduled for early next year.

The deal, a tax free exchange of stock, calls for Chevron to give Huntington Beach Co. shareholders $780 worth of Chevron stock for each share of Huntington Beach. There are approximately 102,000 shares of Huntington Beach Co. stock outstanding. Chevron already owns about 66% of the company, a holding acquired 60 years ago.

Chevron’s second offer comes just 10 days after a $750-per-share all-cash offer from Leucadia National Corp. quietly expired. Leucadia and Huntington Beach Co. officials could not be reached for comment.

The agreement announced Tuesday is 20% higher than Chevron’s original, $650-per-share offer in April. That offer was criticized as inadequate by Huntington Beach Co. shareholders, and in August the company’s independent directors rejected the proposal.

Accept Revised Proposal

The same directors, who were advised by Bankers Trust Co., unanimously accepted Chevron’s revised proposal, Chevron said. Completion of the merger requires formal approval from Huntington Beach Co.’s board and from a majority of its non-Chevron shareholders.

Most of the remaining outstanding shares in Huntington Beach Co. are owned by John V. Crawford; his brother, Thomas H. Crawford, and Roy E. Nafatzger, who are grandsons of the company’s first president, John Vickers. The Crawford brothers, residents of Los Angeles, are in their 70s and retired from ranching. Nafatzger, 60, is still an active rancher in California and Oregon.

John Crawford declined to comment on the pending merger with Chevron, saying in a telephone interview only, “We did it because we did it.” Other shareholders could not be reached.

Although Chevron has owned two-thirds of Huntington Beach Co. for the last 60 years, a spokesman for the giant oil and land-development company said it wanted to make the smaller firm a wholly owned subsidiary to simplify operations.

“It’s more efficient from an operations standpoint to eliminate the minority shareholders and run the company as a true subsidiary,” the spokesman said.

Would Get Complete Control

The merger would give Chevron complete control over a company that some analysts say offers one of the best possible real estate deals in recent years in Southern California. And some think Chevron’s price is too low.

John H. Norberg, a partner in Diehl & Co., a Newport Beach investment banking company, said his calculations show that the company is worth about $1,180 per share, $400 more than Chevron is paying.

Norberg, whose figures have been disputed by Chevron officials, said he based his calculation on evaluations of the company’s oil reserves and its real estate assets, which include office parks, shopping centers, residential developments and at least 360 undeveloped acres on Pacific Coast Highway in Huntington Beach.

Norberg, who owns 100 shares of the company and had actively opposed the first Chevron offer, said he believes the second Chevron offer was spurred by Leucadia National Corp.’s recent offer for the entire company.

However, Norberg said he was told by Leucadia officials that the company would be willing to bid $850 and possibly $900 per share for Huntington Beach because of its real estate assets.

Founded in 1903, the Huntington Beach Co. owns and operates 19 oil wells in Huntington Beach and collects royalties from hundreds of others both on and off the city’s shore. In addition the company owns about 2,200 acres of land in Southern California, about half in Huntington Beach.

Among the land holdings are six industrial parks, including the Harbor Warner Business Center and Harbor Business Park, both in Santa Ana. It also owns 55% of the Huntington Center shopping mall and all of Sea Cliffs Country Club, both in Huntington Beach.

During 1985, the company had profits of $13.8 million from its oil and land-development operations.

The offer is expected to be submitted to Huntington Beach Company shareholders for approval at a special meeting in early 1987. The outside directors have indicated that they will vote their share holdings in favor of the merger, according to Chevron.