Kerkorian may drop Tesoro bid
Billionaire Kirk Kerkorian’s Tracinda Corp. suggested it may withdraw its $1.4-billion tender offer for 16% of Tesoro Corp. after the refinery owner adopted a stockholder-rights plan that Tracinda said violates a condition of the bid. Shares of Tesoro fell 7.6% on Monday.
The rights plan “significantly limits opportunities to enhance stockholder value,” Tracinda said in a statement. Tracinda also said it was “weighing its alternatives.” Tom Gordon, a spokesman for the company, declined to comment further.
“It means they’re considering rescinding the tender offer,” said Roger Read, an analyst at Natixis Bleichroeder Inc. in Houston. “It strengthens management’s position but is a short-term negative on the stock.”
Tesoro, based in San Antonio, adopted the rights plan to block potential acquirers from gaining control without paying a premium for all of its shares, according to a statement Wednesday from the company.
The so-called poison pill wouldn’t be triggered by successful completion of Tracinda’s tender offer because the investment firm would increase its stake to 19.98%, Tesoro said.
“The board believes the rights plan is in the interest of all stockholders,” Tesoro said. “The rights plan trigger of 20% does not otherwise interfere with the Tracinda tender offer.”
Tesoro’s board has not made a recommendation to shareholders regarding the tender offer.
Shares of Tesoro fell $4.23 to $51.69.
Kerkorian, a 90-year-old billionaire, made his fortune investing in movie studios, hotels, casinos and automakers. Forbes magazine ranks him the seventh-richest American, with an estimated net worth of $18 billion.
His investment in Chrysler yielded a $2.7-billion profit when Daimler-Benz acquired the carmaker in 1998. Kerkorian’s bid last year to force General Motors Corp. into an alliance with Renault and Nissan Motor Co. failed.
