Icahn Boosts Stake in Texaco, May Seek Control
Takeover strategist Carl C. Icahn disclosed Tuesday that he has raised his stake in Texaco Inc. to 16.6% and confirmed that he was preparing for the possibility of a second fight for control of the oil giant.
Icahn also accused Texaco management of breaking a promise to shareholders by devising a new anti-takeover defense to replace one that expires April 7.
“It has come to my attention that Texaco management--again without shareholder approval--is about to further insulate itself from accountability by changing their existing ‘poison pill’ to make it even more toxic,” Icahn said in a letter to Texaco President James W. Kinnear.
Icahn, who six months ago lost a bitter struggle against management for control of Texaco’s board, was responding to an article in Tuesday’s editions of the Wall Street Journal. The newspaper reported that Texaco was preparing to replace its expiring poison-pill takeover defense with a new plan.
Icahn said the new strategy was an attempt to “preclude a bid for Texaco by me or by anyone else.”
Texaco assured shareholders during its proxy battle against Icahn that it would eliminate the poison pill, which is aimed at making a hostile takeover prohibitively expensive. Analysts have said that promise was largely responsible for Texaco’s victory in the proxy fight.
Texaco then promised the committee representing its shareholders in the company’s Chapter 11 bankruptcy reorganization that it would not issue another poison pill without the approval of shareholders or authorization from an investment banking firm designated by the committee.
In composite trading on the New York Stock Exchange Tuesday, Texaco stock rose 50 cents to close at $53.50 a share.
The newspaper also reported that the shareholders committee had designated the investment banker Rothschild Inc. to issue a new defense and that Kinnear and Texaco Chairman Alfred C. DeCrane had visited Rothschild’s offices about a successor to the poison pill.
Dennis O’Dea, counsel for the equity committee, denied the panel had made any such designation.
Kinnear issued a statement late Tuesday saying, “This is another case of Carl Icahn protesting without knowing what is being proposed and making claims solely for his own benefit.”
Kinnear said Texaco is considering an interim plan to take effect when the existing pill expires in April. That plan would be in effect until shareholders have the opportunity to vote on it in at Texaco’s annual meeting in May.
Texaco officials said the plan would not preclude any legitimate offers for the company but “would avoid anyone’s acquiring control of Texaco through creeping purchases, to the detriment of other Texaco shareholders.”
Icahn declined to specify his intentions or to say whether a second proxy fight was likely.