Word: socal
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Dates: during 1980-1989
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Gulf was scared, so scared that, to fend off Pickens, it went public on February 24. As the oil world shook itself out, three buyers emerged by the March 14 purchase deadline--Arco at $72, Socal at $80, and an extremely complicated offer worked out by some Gulf executives with the help of a financial house which specializes in this kind of corporate jihad. Although the in-house offer would have reaped the most--$87 per share with plans to spin off the least profitable branches of the company to increase its overall attractiveness--it was too complex...
...reason for the unbridled growth in what might be called the takeover industry has been attributed to oil companies choosing the easy way out. Instead of exploring for oil and gas they capture another company, along with its ever more lucrative reserves. In buying Gulf, for instance, Socal spent $13.2 billion but got $15.4 billion worth of reserves after discounting for the cost of buying the company. Texaco got $10.4 billion in reserves when it snatched Getty...
Gulfs top executives can also benefit mightily. Chairman James E. Lee, who steered his company to Socal in order to evade Pickens, could pick up some $10 million by exercising options to buy Gulf shares. A clutch of other officers can look forward to the same type of windfall. They include: President Edward Walker, $8.8 million; Executive Vice President Harold Hammer, $6.4 million; Executive Vice President Melvin Hill, $4.6 million; and J.L. Huitt, president of Gulf Oil Exploration and Production Co., $2.9 million...
...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...
...course, the deal is creating losers as well. Atlantic Richfield, for example, outbid by Socal for 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...