Word: marathoning
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Mobil entered the battles for Conoco and Marathon because it desperately wants to get additional domestic oil and gas sources to ease its dependence on supplies from Saudi Arabia and some potentially unstable countries. Even though Mobil spent $4.3 billion on domestic exploration and production between 1976 and 1980, its U.S. reserves declined by 6% in the past five years. Buying Marathon could increase Mobil's American oil supplies by 75%. For example, the Yates Field in West Texas, where Marathon owns a half-interest, now produces...
...observers blame its failures on the insistence of Chairman Rawleigh Warner and President William Tavoulareas that they plan their own tactics without consulting outside advisers. Mobil lost out to Du Pont in the contest for Conoco by coming in with a low bid. Its initial $5.1 billion offer for Marathon in October was also immediately denounced as "grossly inadequate" by the company's president, Harold Hoopman. Said a leading investment banker: "If Mobil had bid $126 a share from day one, instead of $85 a share, they would have cut out U.S. Steel from the beginning...
Mobil's bid for Marathon seemed doomed almost from the start. The company suffered defeat after defeat in a series of legal battles fought on several fronts. Last week a federal district court judge in Cleveland again upheld his own decision that the Mobil takeover would reduce competition among gasoline retailers in the Middle West and should not be permitted. Only a few days earlier, another federal court judge in Columbus denied Mobil's request to stop U.S. Steel's offer for Marathon...
...which has become generally more promerger since the beginning of the Reagan Administration. The FTC sued Mobil for violation of antitrust laws in order to block the takeover bid. The FTC has left a loophole, though, that would allow Mobil to go ahead if it gives up some of Marathon's gas stations and its distribution network. But the agency still refused to consider Mobil's offer to sell off part of Marathon's holding to Amerada Hess Corp., another oil company, as a way of maintaining competition in markets where both Mobil and Marathon do business...
...Steel, meanwhile, has executed some brilliant takeover strategy maneuvers. It has already acquired the right to buy Marathon's share of the Yates Field for $2.8 billion if the company is bought by Mobil or any other corporation. U.S. Steel also obtained an option from Marathon to buy an additional 10 million shares of its stock, which would make it harder for Mobil to gain controlling interest in the company. Mobil, of course, could try to block both moves in court...