Word: casseb
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Pennzoil will not get rich right away. On Dec. 5, Judge Solomon Casseb, who presided over the trial, will review the jury's decision. He could uphold, overturn or reduce the award. Texaco has vowed to fight his decision if it does not get a favorable judgment, and the case could eventually go to the Supreme Court. Whatever the outcome, last week's ruling is likely to make companies and corporate raiders more cautious about the tactics used in megabuck merger negotiations. --By Gordon M. Henry. Reported by Dean Brelis/New York and Gary Taylor/Houston
...world of megadollar mergers, it is perhaps only fitting that court fines are also measured in billions. Three weeks ago, a Houston jury ordered Texaco to pay Pennzoil $10.5 billion in damages for snatching Getty Oil away from Pennzoil in a takeover battle. Judge Solomon Casseb last week was due to review the decision. He could uphold, overturn or reduce the award. Journalists, high-priced lawyers, Wall Street traders and more than 200 onlookers last Tuesday squeezed into a cramped fifth-floor room in the Harris County Civil Courts Building, anticipating a decision. Casseb's verdict was expected...
Pennzoil naturally was elated. The award could catapult the 36th-largest U.S. oil company into the ranks of the oil giants. Pennzoil's stock, which stood at $49.875 a month ago, closed at $66.125 last week. Upon hearing Casseb's ruling, Pennzoil Attorney Joseph Jamail and Chairman J. Hugh Liedtke exchanged bear hugs and laughed aloud. When a reporter asked a jubilant Liedtke whether he still might settle with Texaco, he replied, "We're always willing to discuss matters. The problem is that dealing with Texaco is like trying to frisk a wet seal...
Texaco won one concession in its eleventh-hour negotiation with Pennzoil: a delay in the imposition of a bond. Normally, if Texaco wished to appeal Casseb's decision, it would be required to post bond to prevent Pennzoil from seizing the property it won in court. The bond would be worth the amount of the decision plus attorney's fees and interest, in this case, about $12 billion. Texaco said that it could not come up with so much money without going bankrupt. Pennzoil agreed to a grace period during which Texaco can prepare an appeal--or, perhaps, a settlement...
Texaco switched from offense to defense as Casseb's ruling approached. The company announced last week that it had adopted a so-called poison-pill provision to ward off raiders who might be tempted to try a takeover in view of the dip in Texaco stock. And one hour before going to court on Tuesday, Texaco offered to sell Pennzoil at 1984 prices the 1 billion bbl. of oil and gas reserves that it had originally wanted to buy from Getty. Liedtke called the offer "silly...
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