Big Block of Texaco Stock Sold; Icahn May Be Buyer
A big block of Texaco Inc. stock changed hands Tuesday, but it was not known who participated in the sale or what it might mean for the impending proxy showdown between the oil giant and financier Carl C. Icahn.
New York Stock Exchange officials reported around 11 a.m. EDT that 7,696,300 shares, representing 3.2% of Texaco’s 243 million shares outstanding, had changed hands at $50.25 per share.
“The question is not who sold it, but who bought it,” said one trader, who agreed to discuss the matter only if not quoted by name. “Somebody is out there who really wants to own this, because they bought when the stock was down only a quarter. That’s a high price to pay for it if nothing’s going on.”
Analysts raised the possibility the buyer might have been Icahn, who offered to buy the Texaco shares he did not already own for $60 a share. His last report to the government said he held a 14.8% stake in Texaco, making him the company’s largest shareholder.
As for the seller, Wall Street speculation centered on Kohlberg Kravis Roberts & Co., an investment firm known to have held a 4.9% stake in the nation’s third-largest oil company.
Kohlberg Kravis, a highly successful leveraged buyout firm, had been the subject of much speculation on Wall Street over whether it intended to bid for Texaco.
No Comment on Deal
On Monday, Icahn said one of the firm’s partners, Henry Kravis, had told him Kohlberg Kravis might make a bid if Icahn’s offer was put before Texaco’s shareholders. Giving a deposition for a lawsuit, Icahn quoted Kravis as saying he “might be willing to pay more” than $60 a share.
Tom Daly, of the public relations firm Kekst & Co., which represents Kohlberg Kravis, said: “They are not saying anything” on the matter. A woman at Icahn’s office said he had no comment.
Lois Johnston, a spokeswoman at Texaco’s headquarters in White Plains, N.Y., said: “As a matter of policy, Texaco does not comment on market activity.”
Icahn is deep into an assault on Texaco.
When Texaco refused to put his buyout offer to a shareholder vote, Icahn went forward with his threat to run himself and four colleagues for the five Texaco board seats up for election at the company’s annual meeting Friday. He said he wanted the seats on Texaco’s 14-member board so he could pressure the company into putting his offer before the shareholders.
Wall Street has shown skepticism about Icahn’s ability to finance a takeover bid, keeping the price of Texaco stock well below his $60 offer.
That led some analysts to speculate that Kohlberg Kravis was the seller.
Michael Young, an oil analyst at Smith Barney, Harris Upham & Co., said he agreed that Kohlberg Kravis was the likely seller and that the buyer was probably Icahn.
Leads Active List
“Whoever they sold it to, it did not go into loose hands,” he said. “It’s done 12 million shares today, and the price is virtually unchanged.”
Texaco was the most actively traded issue on the New York Stock Exchange, ending the day at $50.375 a share, down 12.5 cents.
“If it was KKR, it went into someone else’s hands just as tight and just as aggressive. That sounds like only one person to me--but we’ll have to wait until Icahn files with the SEC to find out,” Young said.
Young was referring to a Securities and Exchange Commission rule that all acquisitions or sales of a stock in a company must be reported once a shareholder owns more than 5% of a company’s stock.
