Texaco Stock Pumped Up by Buyout Rumor

Shares of Texaco surged in active trading Wednesday, boosted by intensifying speculation that financier Carl C. Icahn might be planning a new effort to gain control of the oil giant.

The speculation catapulted Texaco $2.50 to 51.375 on the New York Stock Exchange, its third consecutive rise. The jump made a major contribution to Wednesday’s 4.27-point gain in the Dow Jones average of 30 industrials, which closed at 2,153.63.

Icahn, owner and chairman of Trans World Airlines, holds a 14.8% stake in Texaco. Last June, he lost a proxy fight to oust the oil company’s top management.

USA Today financial columnist Dan Dorfman reported Monday that an unidentified party recently approached Icahn about selling his Texaco stake. Dorfman also said he picked up “solid reports” that another party--possibly the one that approached Icahn--has been quietly accumulating Texaco shares.

Separate Block of Shares

The speculation mounted when the New York Times suggested in Tuesday’s editions that Icahn is in talks with another party to launch a new takeover battle for Texaco.

The Times story quoted unidentified oil industry sources as saying that the deal under discussion would eventually give Icahn the opportunity to sell his Texaco stake. The other partner reportedly would build up a separate block close to 8% or 9% of the company’s outstanding shares.

A trader with the investment firm Bear Stearns told Dow Jones Professional Investor Report on Wednesday that his brokerage firm has been buying Texaco shares. He named Salomon Bros. as another buyer.

Icahn did not return a reporter’s call Wednesday.

He told Dow Jones that he has no intention to sell his Texaco shares and continues to believe that the company’s stock is undervalued. He also indicated that he may purchase additional Texaco stock from time to time, based on market conditions.