2 More Big Texaco Holders Say They’ll Vote With Icahn : Analysts Expect Proxy Fight Outcome to Be Extremely Close
At least two large institutional shareholders of Texaco Inc. disclosed Wednesday that they will vote with Carl C. Icahn in his proxy battle with Texaco’s management.
The New York-based College Retirement Equities Fund, Texaco’s third-largest institutional shareholder, said it cast the proxies from its 3.4 million shares with Icahn. The California State Teachers Retirement Fund said it, too, decided Wednesday to vote its 848,172 shares against management. Both said, however, that last-minute developments could make them change their vote.
Icahn, thwarted in efforts to put a $60-a-share acquisition offer to Texaco shareholders, is trying to get himself and four allies elected to Texaco’s board.
Despite the votes announced Wednesday by the two institutions, securities analysts said they still can’t predict the outcome of the proxy contest, although several said they believe that management continues to have a slight edge. Voting will close Friday at Texaco’s annual meeting in Tulsa, Okla. But shareholders may be kept in suspense for some time. A Texaco official said the results may not be tabulated for weeks because of the difficulty in counting last-minute votes.
Philip G. Popkin, an investment officer with the College Retirement Equities Fund, said the pension fund voted with the dissident financier because “we strongly feel we can maximize our shareholders returns by coming down on the side of Mr. Icahn.”
Janice Hester, corporate affairs adviser for the California teachers fund, said that after long deliberations the fund voted for Icahn because it wants his $60-a-share offer put before shareholders. She said anti-takeover provisions incorporated into Texaco’s charter would make it extremely difficult for him to launch a hostile bid. Hester said the fund also was impressed by Icahn’s move earlier this week to place $310 million in an escrow account that he would forfeit if he fails to come up with financing for his offer.
Others Side With Icahn
The vote by institutional investors is considered crucial to the outcome of the proxy fight. These large shareholders jointly control about 35% of Texaco’s 242.9 million shares outstanding. Most aren’t expected to disclose their votes before late today. The few that in recent days have disclosed their votes are divided.
In addition to the College Retirement Equities Fund and the California teachers’ fund, those known to be voting with Icahn include Dreman Value Management Inc., the second-largest institutional holder, with 3.5 million shares, and the Wisconsin Investment Board with 1.1 million.
Known to be on management’s side are the New York State Common Retirement Fund with 3 million shares, the California Public Employees Retirement System with 873,000 and the Pennsylvania Public School Employes Retirement System with 700,000.
The California and Pennsylvania employees funds both sat on committees with Texaco’s management during the company’s recent bankruptcy reorganization and are strong supporters of Texaco Chief Executive James W. Kinnear. An official at the California fund confirmed that talks are under way with Texaco for possible representation on Texaco’s board by large institutional shareholders, although they said no formal agreement has been reached.
Among the big holders that haven’t yet publicly disclosed their vote is Wells Fargo Bank, which controls 3.3 million shares.
A lingering mystery is who acquired a major block of 7.7 million Texaco shares that was sold Tuesday, apparently by the investment partnership of Kohlberg Kravis Roberts & Co. Traders and analysts said they still had no confirmation of who the buyer was, although it almost certainly wasn’t Icahn himself. They said Icahn would have had to disclose the acquisition publicly Wednesday, and no disclosure was made.
Won’t Disclose Tallies
Several of the companies named by analysts as possible buyers of the block, including Canadian oil companies such as Husky Oil Ltd. and Gulf Canada Resources refused to comment Wednesday.
Analysts said, however, that there is a strong probability that the block will be voted for the Icahn side. They said whoever bought such a large block at this stage of the fight probably expects to benefit from an Icahn win.
Most individual investors, who control about 40% of Texaco’s shares, are expected to side with management. Icahn himself controls 14.8% of the company’s stock.
Texaco spokesmen Wednesday refused to comment on how the voting was going. Both Texaco and proxy solicitors for Icahn refused to disclose tallies of votes received so far.
Texaco’s stock ended lower Wednesday, closing at $49.875, down 50 cents in composite trading on the New York Stock Exchange. Frank Kneuttel, an analyst with Prudential-Bache Securities, noted however that oil stocks were down in general Wednesday because of the results of the Organization of Petroleum Exporting Countries meeting and worries about oil prices, and said the drop didn’t necessarily indicate Wall Street doubts about Icahn’s chances.
