Icahn Concedes Defeat After Big Holder Says It Voted for Texaco’s Slate
Investor Carl C. Icahn conceded defeat Monday in his historic proxy fight for control of Texaco, after one of Texaco’s biggest stockholders said it voted for the oil giant’s existing management.
“I am of course sorry that I did not win, but so be it,” Icahn said in a statement after Kohlberg Kravis Roberts & Co., a New York investment firm and itself a takeover powerhouse, said it voted its 12 million Texaco shares for management at Texaco’s annual meeting Friday. KKR’s stake represented about 4.9% of Texaco’s 243 million common shares outstanding.
KKR also confirmed that it no longer owns the stock, but that it had owned the shares April 11, which was the record date for stockholders to vote in the contest--considered the biggest proxy fight in history.
The overall tally of the voting is unlikely to be known for weeks. But Texaco had immediately declared victory after the meeting, and Icahn, who owns roughly 36 million, or 14.8%, of Texaco’s shares, had said then that “we definitely lost” if KKR voted against him.
“As I stated after the annual meeting, I believed that the vote was very close and that KKR would be the swing vote,” Icahn said in his statement. “I did what I believed should be done in waging this proxy contest and fought as hard as I could.”
Peter Maneri, a spokesman at Texaco’s White Plains, N.Y., headquarters, said the company was “gratified that KKR voted for the management slate,” but he declined further comment.
In the proxy contest, Icahn had sought to replace five of Texaco’s 14 directors--including Texaco Chief Executive James W. Kinnear--with himself and four allies. Icahn hoped to then force the board to let shareholders vote on his offer to buy the company for $60 a share, or $14.6 billion.
With Icahn acknowledging defeat, investors’ attention shifted to what Icahn now might do with his Texaco stock.
Icahn’s statement made no mention of his plans, and Icahn did not return telephone calls to his New York office requesting comment. Neil Call, executive vice president of D. F. King, Icahn’s proxy-solicitation firm in this contest, said Icahn was evaluating his options, including “whether to hold the shares, sell, go for a hostile offer or look for a partner.”
Icahn previously had threatened to sell his stake if he lost the proxy fight, and conversely hinted he that might launch a hostile tender offer. Meanwhile, Kinnear said last week that his company had no intention of buying back Icahn’s shares.
In any case, Icahn is not likely to merely dump the shares on the market because that would depress the stock’s price.
As it is, Texaco’s stock continued sliding as Icahn’s takeover threat abated. The stock, which had traded in the $50-a-share range as the proxy fight waged, fell $1.125 to $46.875, in New York Stock Exchange composite trading after losing $1.50 a share Friday. About 3.05 million shares changed hands Monday, making Texaco the Big Board’s most-active issue.
Bruce Lazier, an oil analyst for the investment firm Prescott Ball & Turben, said KKR’s announcement that it sided with management was not a surprise in light of Texaco’s earlier declarations of victory. “You had to believe they (Texaco) knew they had the KKR proxies,” he said.
KKR said it sided with management because it was “impressed by the restructuring steps” Texaco has taken since emerging from bankruptcy proceedings April 7. KKR also said it “is supportive” of Texaco’s restructuring efforts planned for the months ahead.
Although solvent, Texaco filed under Chapter 11 of the U.S. Bankruptcy Code in 1987 after a Texas court jury ordered Texaco to pay $10.3 billion to Pennzoil for illegally interferring in Pennzoil’s bid to acquire Getty Oil. Texaco eventually bought Getty instead.
Texaco settled the case, and cleared the way for its emergence from Chapter 11, by paying $3 billion to Pennzoil. In addition, Texaco has begun selling off up to $5 billion worth of assets, and it plans to distribute $1.7 billion of those proceeds to its stockholders.
