Holder Suit Seeks to Block BP Bid for Standard; Price of Target’s Stock Dips
Lawyers wasted little time in moving to block British Petroleum’s planned $7.4-billion takeover of the rest of Standard Oil, but any dissatisfied shareholders didn’t get much encouragement Friday from the stock market.
After surging briefly above the $72-per-share mark Thursday on the news of BP’s $70-per-share offer--apparently on the belief that the bid will have to be sweetened to satisfy shareholders--the price of Standard Oil shares on the New York Stock Exchange ended the week at $70.50. It was risky to interpret that decline of nearly $1 from the previous day’s close in light of the stock market’s steep fall Friday.
But Some analysts regarded the decline as evidence that the market believes that BP’s offer is a fair one.
“I think it’s a very generous offer, and it’s reflected in the movement of the stock,” said analyst Thomas Lewis of Duff & Phelps in Chicago. “We went to a sell recommendation Thursday when it hit $72. We made up our minds real quick on this one.”
Standard’s stock was trading in the $65 range Thursday before BP announced its bid to buy the 45% of Cleveland-based Standard that it doesn’t already own.
Standard Oil has referred the proposal to a special board committee, which retained the investment banking firm of First Boston for advice. It was understood that no recommendations are expected before the end of next week.
The circumstances bear some resemblance to the 1985 move by Royal Dutch Shell Group of London and Amsterdam to acquire the 30% of Shell Oil Co. of Houston that it didn’t already own. The same attorneys who succeeded in sweetening that deal for Shell shareholders sued Thursday to block BP’s planned buyout.
The suit in a Cuyahoga County, Ohio, court calls $70 per share “a fraudulently low and unfair price.” It accuses BP of installing its own managers in Cleveland and “packing” Standard’s board of directors last year for the express purpose of clearing the way for a “freeze-out” of Standard shareholders.
The suit was filed by New York attorney Stephen Lowey on behalf of shareholders John and Marjorie Moore of Belvedere, Calif.; Louis H. Goldman of New York, and David Grobow of Englewood, N.J., and claims to be a class-action case on behalf of all shareholders. Standard Oil attorneys were expecting a second such suit to be filed late Friday.
Lowey, whose 1985 lawsuit eventually led Royal Dutch Shell to boost its offer for outstanding Shell Oil stock to $60 a share from its initial $55 proposal, wouldn’t elaborate on his lawsuit or comment on Friday’s slippage in the stock price.
