Occidental Petroleum Corp. implemented a so-called poison pill plan to defend against unsolicited takeover approaches as activist investor Carl Icahn escalates his campaign to fire the beleaguered U.S. oil producer’s board.
Such measures are usually deployed in hostile takeover situations. Occidental is implementing the plan later this month and will allow shareholders to vote on it at the company’s annual general meeting, according to a statement Friday. If the shareholders vote down the pill, it will expire. But if they vote in favor, it will extend for one year.
The company’s stock has dropped about 60% this month amid collapsing oil prices, allowing Icahn to quadruple his investment in Occidental, which he has criticized for its $37-billion purchase of Anadarko Petroleum Corp. last year. On Thursday, he said “strong bids” would eventually emerge for Occidental and a new board should consider them.
Earlier this week, Occidental cut its dividend by 86%, the first cut in 30 years.
Icahn, who holds a 10% stake in Occidental, would try to “get control of this company,” he told CNBC in an interview Friday. He declined to comment on whether he would raise his holding but doubled down on his criticism of Chief Executive Vicki Hollub and the board.
“It’s a study in what shouldn’t be done in corporate America,” he said. “It makes a travesty of corporate governance.”
Icahn believes Hollub pushed the Anadarko deal to avoid being acquired by a rival, even at a share price of $70, nearly six times higher than today.
Under the terms of Occidental’s plan, stockholders will be issued one “right” for each share they own as of March 23. The rights would be exercisable should anyone amass a 15% stake in the Houston-based company.
If exercised, the rights will give the owner “that number of shares of common stock having a market value of two times the exercise price of $55.00 per right.”
The idea is to effectively dilute a potential buyer if they purchase up shares at low price levels.
Icahn on Thursday called the Anadarko deal “one of the worst disasters in financial history” and said it has destroyed $47 billion in shareholder money. He has singled out Hollub as putting her own job before investors’ best interests.
The announcement Friday appears to make any resolution between Icahn and Hollub less likely.