Texan Would Sell Some Shamrock Assets : Pickens’ Bid Draws Icy Response

If takeover artist T. Boone Pickens Jr. is successful in his $2-billion attempt to take over Diamond Shamrock, the Dallas oil and gas company would be operated as a separate entity and its coal operations would be sold, according to a document filed Wednesday with the Securities and Exchange Commission.

But chances are that Diamond Shamrock, led by authoritarian Chairman William Bricker, will not easily give in to the advances of Pickens’ Mesa Limited Partnership and its ally in the takeover, Alabama construction magnate John M. Harbert III. Bricker recently said publicly that the company is not for sale.

Bricker stressed that desire to remain independent in a phone call Monday to Pickens, the filing said. Pickens offered to meet, but Bricker said he wasn’t interested if the subject were to be the restructuring or acquisition of Diamond Shamrock. Pickens confirmed that “that was what he would want to talk about,” the filing said.

Mesa announced late Tuesday that it was proposing to acquire Diamond Shamrock by exchanging Mesa partnership units for all of the outstanding shares of Diamond Shamrock. The stock swap must first be approved by the SEC, which could take four to six weeks, a Mesa spokesman said. Mesa already owns a 4.5% stake in Diamond Shamrock.

No Comment From Board

The offer is conditioned on receiving a majority of Diamond Shamrock’s stock and withdrawal of the company’s “poison pill,” which allows shareholders to buy stock at half price in the event of a hostile takeover. Diamond Shamrock has said its board will review the proposal but had no other comment.

Also on Tuesday, Bricker met with Harbert and was told Harbert would own the controlling equity interest in Diamond Shamrock after the takeover, according to the registration statement. Bricker’s response was not revealed.

If a merger is consummated, the new partnership would keep all of Diamond Shamrock’s assets except its coal business, Pickens said in a letter delivered to Bricker on Wednesday and included in the registration statement.

Diamond Shamrock already has put its coal operations up for sale as part of Bricker’s plan to get the company out of all businesses but oil and gas. Diamond Shamrock sold its chemicals operations in September for about $850 million.

Pickens said in the letter that he thinks the companies are a good fit because Diamond Shamrock’s “oil and gas properties complement (Mesa’s) predominantly long-life domestic gas properties.”

“In order to maintain the company’s relationship with its employees, communities and customers, we contemplate that following such a merger and related transactions, the company would function as a separate entity, of which the sole shareholders would be (Mesa) and a corporation controlled by Mr. Harbert,” the letter said. “We will necessarily rely to a large extent on Diamond’s employees to operate the business.”