Oxy Stock Climbs on Rumors of Sale of Meat Processor : Busy Trading Rides Speculation That Firm May Be Restructured
Amid indications that Occidental Petroleum has been approached by someone interested in buying its meat-packing subsidiary IBP Inc., investors bid up the price of Oxy’s common stock to a 12-month high Friday on the New York Stock Exchange.
The heavy trading was touched off by analysts’ speculation in London and New York that Occidental was preparing to restructure itself and to sell the unit once known as Iowa Beef Processors. Oxy officials said they would not comment on the market rumors.
Occidental stock closed at $37 a share, up 50 cents. Nearly 2.8 million shares changed hands, making Oxy the fourth most-active stock. On Thursday, the stock had gained $1.875.
Executives of the Los Angeles-based energy, chemical and agribusiness firm have made clear for several years that they were willing to part with the marginally profitable IBP. One executive predicted recently that it would be sold within two years.
Rumors Surface
The latest rumors apparently surfaced after agents for potential buyers proposed a meeting. But company insiders said they are unaware of any negotiations having begun.
On Cable News Network Thursday evening, investment analyst Dan Dorfman said “the word is” that Occidental “may embark on a major restructuring program.” In London, Salomon Bros. oil analyst Bernard Picchi reportedly said something was afoot on the sale of IBP.
Occidental’s two top executives, Chairman and Chief Executive Armand Hammer and President Ray Irani, were in Moscow on Friday, where the 89-year-old Hammer received a humanitarian award from a physicians’ anti-nuclear group. Hammer isn’t due to return to Los Angeles until June 9.
The biggest and most profitable firm in the highly competitive meat-processing industry, IBP has nonetheless been a headache for Occidental since Hammer confounded analysts by buying the firm in 1981. The deal arose after Hammer and Los Angeles financier David Murdock, IBP’s biggest shareholder, journeyed together to Russia to buy a horse.
Murdock became Oxy’s biggest stockholder and promptly tried to wrest control of the company away from Hammer, according to Hammer. Murdock was ultimately bought out at a costly premium. More recently, IBP’s labor troubles at a Nebraska plant have given Occidental a black eye.
Analysts generally discounted the notion of a major restructuring, noting that Occidental has been doing just that over the past two years with a number of major acquisitions and sales.
