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Pickens Leads Mesa Board to Adopt Anti-Takeover Plan

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From Bloomberg Business News

Mesa Inc. Chairman T. Boone Pickens, a former corporate raider, led a board vote to adopt an anti-takeover plan similar to proposals he once criticized as shields for entrenched management.

In a special meeting Thursday, Mesa’s 10-member board adopted a shareholder rights plan that the oil and gas company said would prevent it from being sold at too low a price. The board also agreed to review a possible sale or merger of Mesa.

Approval of the rights plan doesn’t contradict Pickens’ long-running crusade against “poison pill” defenses against takeovers, Mesa said.

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“Our shareholder rights plan is in fact penicillin,” spokesman Jay Rosser said. “It fights the infection but doesn’t poison any legitimate offers.”

The plan follows a tumultuous month for Dallas-based Mesa that included a failed effort to sell almost two-thirds of its assets to repay debt and a takeover threat from billionaires Marvin Davis and Dennis Washington. The two men last week said they would try to gain control of the company’s board if Pickens didn’t consider a sale or merger.

The rights plan would be triggered if any person or group acquired 10% or more of Mesa’s stock after Thursday. For Mesa’s management, which already owns 12%, the plan would be triggered if they increased their stake by 100,000 shares.

If triggered, the plan would allow shareholders to buy stock at a 50% discount. The plan expires after 18 months, the company said.

The proposal gives shareholders the right to vote on any tender or exchange offer received after Sept. 30, regardless of the board’s approval, Mesa said. The offer to buy shares would have to be good for 50 business days, however.

If the company receives a cash bid for itself, it must be fully funded for the board to consider it, according to the plan. If it’s an exchange offer, the bidder’s net worth must exceed that of Mesa and the exchange must be for more than 75% of Mesa’s stock.

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Analysts say mesa must be sold if it is to solve its debt problems. The company has been unable to finance new drilling because of its $1.2 billion in debt.

Mesa shares fell 25 cents to $4.75 on the New York Stock Exchange.

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