Word: chevrons
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...sector of corporate America. The consequences of his actions have been stunning. They have resulted in the end of Gulf Oil, Cities Service and others as independent companies. Pickens last year forced Gulf (1984 sales: $28.4 billion), the fifth largest U.S. oil company, to sell out to No. 4 Chevron ($29.2 billion) for $13.2 billion in the biggest merger in business history. The Pickens group's profit on that deal: $760 million. Earlier, it earned $31.5 million by driving Cities Service ($8.5 billion before its 1982 merger) into the arms of Occidental Petroleum...
...estimates that as a result of his takeover battles, about 750,000 small investors have seen the value of their holdings grow by about $12 billion. His pursuit of Gulf, for example, pushed that company's stock from $41 a share in October 1983 to the $80 that Chevron agreed to pay for it in March...
...sold out to other buyers at a higher price and thus increased the value of Pickens' stock. Result: he earned huge profits but never took over those companies. Last year Pickens and friends made $760 million through their run at Gulf, which was eventually taken over by Chevron...
Major acquisitions, though, can have some negative consequences. The debt that companies incur to finance takeovers can reduce their earnings and lower their stock prices. Chevron shares fell to a twelve-month low of 30 last week, partly because of its heavy borrowings...
Some industry experts, however, speculated that Pickens was actually hoping Phillips would recruit a so-called white knight, perhaps Shell Oil or Atlantic Richfield, to take over the Oklahoma company. He would then sell his shares to the acquiring company at a premium. That happened last year when Chevron bought Gulf, after Pickens had made an unwelcome takeover bid. He and his partners made more than $400 million on that deal...