Word: merger
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Dates: during 1980-1989
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...proposed merger of LTV's Jones & Laughlin Steel subsidiary and Republic Steel was a relatively easy matter for the two companies to agree on six months ago, but in the past five weeks it has turned into a subject of sharp controversy within the Reagan Administration. J. Paul McGrath, the Assistant Attorney General for antitrust policy, first vetoed the agreement on the grounds that it violated Justice Department merger guidelines. Commerce Secretary Malcolm Baldrige then wrote an article in the New York Times calling McGrath's decision "a world-class mistake." President Reagan strayed into the fray...
Unlike the public bidding that preceded the Gulf deal, the grab for Superior was made in great secrecy. Using pseudonyms, Mobil President William Tavoulareas traveled to Texas earlier this month to make final arrangements. The merger looks very good for Mobil, which will be paying just under $6 per bbl. for Superior's 1 billion bbl. of oil and liquid natural gas reserves, vs. average exploration costs...
...will Gulfs 300,000 shareholders fare badly. They hold 165 million shares that since last summer have jumped in value from $40 to $80 a share, for a total gain of more than $6 billion. Says Donald Drapkin, a merger specialist with Skadden, Arps, Slate, Meagher & Flom, a leading New York City law firm: "Pickens created real value for Gulf shareholders in a stock that was stagnant before he arrived on the scene...
...moneymen who worked on the merger have been major winners too. Salomon Bros, and Merrill Lynch, Gulfs advisers, will split $46 million in fees. Morgan Stanley, Socal's investment banker, has received $1 million so far, and will be paid $15.5 million more when more than half the Gulf shares are acquired. And Bank of America, which arranged a $14 billion credit line to finance the buyout, will collect $500,000 for that service...
...Gulfs stock, will have to pay several million dollars in fees to the 61 banks that raised $12 billion to support the Arco offer. Setbacks have also befallen investors, many of whom began selling their Gulf shares last week as the market turned against them, fearing that the merger would be blocked. Said one speculator: "We got hurt two days in a row on this. What's the sense of being right if you're losing money...