Word: icahn
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Acquisitors Carl Icahn and Sir James Goldsmith were also on the prowl last week. Goldsmith, who controls Grand Union supermarkets and France's L'Express magazine, formally offered more than $800 million for up to 70% of Crown Zellerbach, a forest products company that has been fighting off the interloper since December. The day after the Goldsmith proposal, Icahn said he would pay $305 million for 51% of Uni-royal, a tire and chemical manufacturer, which immediately spurned the deal. The moves were only the latest in an increasingly frenzied round of takeover brawls and mergers. Last month Capital Cities...
Backed into a corner, the Phillips board huddled on Sunday, March 3, and came up with a sweetener that finally satisfied Icahn. It offered to swap IOUs with a face value of $62 each for half of Phillips' outstanding shares. The plan would add $4.5 billion to Phillips' corporate debt, raising it to $7.3 billion. That would equal 75% of the firm's total worth, well above the typical 40% to 50% level for American industry...
Although analysts predicted that the debt package would be worth only about $55 a share once the securities started trading, Icahn declared victory and withdrew. "We're delighted about the outcome," he said. "Now I think it is a fair deal." Pickens chose to sell his 8.9 million shares back to the company at the $53 price that he had been promised last December. It was about time, said Pickens, that Phillips came around, instead of acting like a "mother handing a lollipop to her children one piece at a time...
...America. To William Higgins, a Value Line oil stocks analyst, the fight for Phillips reflected profound changes in the U.S. economy. The raiders, he says, "are prying money loose for better investment. This has happened in every mature industry as long as there has been a stock market." To Icahn, the biggest winners were ordinary Americans, whose pensions are managed by the institutional investors who voted against the initial Phillips offer. That showed, he said, that shareholders "can stand up to the corporate establishment and get a better deal...
...likely to go on "as long as you have undervalued assets," according to Joseph Fogg III of the New York investment banking firm Morgan Stanley. For its part, Phillips can rest easy. Pickens promised not to launch a new battle for the company for at least 15 years, and Icahn agreed to stay away for eight. But those may be meaningless pledges. With all its new debt, Phillips has lost much of its luster as a takeover target...