Pure Resources Officials Back Share Sale to Unocal

After sweetening the deal for a second time, Unocal Corp. of El Segundo won management’s endorsement Wednesday of its bid to acquire the 35% of oil and gas explorer Pure Resources Inc. it does not already own.

Pure Resources’ top management agreed to accept a bid of 0.74 Unocal share for each of their Pure shares, which combined represent about a 5% stake in the Midland, Texas-based company.

A committee of the Pure Resources’ board also recommended Wednesday that other shareholders accept the increased offer for their 30% stake in the firm, Pure Resources said. Company officials declined to comment further. Board approval isn’t needed, because Unocal made the offer directly to shareholders.

The revised offer is for $370 million, or $21.02 a share, based on Unocal’s closing price Wednesday of $28.41 on the New York Stock Exchange.

Management’s agreement to sell was seen as key to ending an impasse in which some shareholders went to court to block the deal, arguing that Unocal’s initial August offer of 0.6527 Unocal share for each Pure share was too low.

Unocal had raised its offer to 0.70 share Oct. 2 when its initial offer was set to expire.

Pure Resources was formed in May 2000 when Unocal spun off its oil and natural-gas exploration and production operations in west Texas and New Mexico and merged them with Titan Exploration Inc.

With sole ownership, Unocal would gain control of Pure Resources’ oil and gas assets in the Permian Basin of west Texas, the San Juan Basin in New Mexico, the Gulf of Mexico and Gulf Coast. The deal also would boost Unocal’s cash flow by more than $200 million a year, Unocal spokesman Barry Lane said.

“We’ve actually been competing with Pure for properties in some areas,” said Lane, explaining why the acquisition comes just two years after the company was formed. “And by having the public company structure there is a lot of duplication. We hope to achieve some synergies with this.”

On Wednesday, Pure Resources shares fell 26 cents to close at $20.92 on the NYSE.