Word: texaco
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...nearly four years, Texaco and Pennzoil have been corporate America's equivalent of Iran and Iraq, fielding armies of lawyers to pound each other with salvos of briefs and appeals. Last week the war came to an end. Both sides announced that they had reached an agreement to settle the historic dispute that drove Texaco into bankruptcy court and has already generated about $100 million in legal fees, with more sure to come...
Under the deal Texaco will pay Pennzoil $3 billion. That is far less than the $10.5 billion penalty that a Texas jury ordered Texaco to give Pennzoil in 1985. The jury held that in early 1984 Texaco illegally acquired Getty Oil, which had already promised to merge with Pennzoil. But Texaco was determined to appeal the case to the U.S. Supreme Court. The stakes were frighteningly high. If Pennzoil refused to settle and then lost, it might have wound up with nothing. If Texaco lost, it would have been destroyed...
Despite strong incentives to settle the dispute at times seemed irresolvable. The bitterness peaked last April, when Texaco filed for Chapter 11 protection to avoid posting a bond to cover the jury award. Charged Texaco Chief Executive James Kinnear: "Pennzoil has placed its own greed above any consideration of fundamental fairness or the public welfare." Said Pennzoil Chairman J. Hugh Liedtke: "Maybe now we should sit back a while and see how they like bankruptcy...
...biggest corporate brawl in history could be nearing an end. Thanks in part to the negotiating skills of TWA Chairman Carl Icahn, a settlement may be at hand in the epic legal battle between Texaco and Pennzoil. Since 1985 Texaco has been appealing a court order to pay Pennzoil $10.5 billion in damages as a result of a merger dispute. In April, Texaco filed for bankruptcy protection. Enter Icahn, who three weeks ago became Texaco's largest stockholder by boosting TWA's holdings to 12.3%. Icahn helped forge a deal between Pennzoil and a committee representing Texaco's shareholders...
When Australian Raider Robert Holmes a Court spent more than $800 million to buy 9.6% of Texaco's stock for an average of $37 a share this year, many Wall Streeters applauded his gutsy vote of confidence in the bankrupt oil giant's chances for recovery. But after the October stock crash, Holmes a Court faced a severe cash squeeze. Sensing a distress sale, another renowned raider, TWA Chairman Carl Icahn, entered the picture last week. TWA bought about half of Holmes a Court's stake in Texaco for $348 million, or just $29 a share. The Australian's loss...