‘White Knight’ for Texaco May Be Royal Dutch

Texaco Inc. shares rose Wednesday on speculation that a friendly suitor will emerge with a bid more attractive than Carl C. Icahn’s yet-to-be-financed offer of $60 a share.

Texaco, whose board rejected Icahn’s offer and labeled it “illusory,” was rumored to have been approached by the European oil giant Royal Dutch Shell Group as a friendly bidder, Wall Street sources said Wednesday.

“The rumor is that Royal Dutch will make a bid at $64 a share,” one money manager said.

Antitrust Problems

“Royal Dutch is ready, willing and able to be a white knight,” he said, citing its $10 billion in cash, low debt and expressed desire to buy certain Texaco assets. Texaco rose $1.625 to $51.75 on the New York Stock Exchange. (A white knight is a term that refers to a company that rescues another from a hostile takeover by buying the entire firm or portions of its assets.)

However, some analysts said such a merger would likely face antitrust problems in Washington and could require the sale of some assets of the two groups.

Icahn, who offered $12.4 billion for the shares of Texaco he does not own, will meet with financial analysts Thursday to unveil his plans to fund the takeover. He owns 14.8% of Texaco’s stock and is the largest Texaco shareholder.

Both Firms Decline Comment

Texaco officials declined comment on the reports of a white knight, citing a policy of not commenting on market rumors. A spokesman for Shell Oil Co., the U.S. unit of Royal Dutch Shell Group, declined comment.

Also, Kohlberg Kravis Roberts & Co. was rumored to have hired investment banks Merrill Lynch and Drexel Burnham Lambert to study financing a bid for Texaco. Kohlberg, which recently said it holds about 4.9% of Texaco, declined comment.

Since it has never launched a hostile bid for a company, traders saw Kohlberg as another possible white knight.