George Keller; Bold Socal Head Led Historic Gulf Oil Takeover
Sunday, October 19, 2008
George M. Keller, 84, who, as head of Standard Oil of California, made business history in 1984 by taking over another huge oil company in an unprecedented $13 billion buyout that he characterized as a "bet-your-company deal," died Oct. 17 in California.
He died at Stanford University Medical Center in Palo Alto of complications of knee surgery. He lived in San Mateo, Calif.
After being trained as a chemical engineer and rising through the ranks of Standard Oil of California (Socal), Mr. Keller was his company's chairman in 1984 when he put up more than $13 billion to purchase Gulf Oil. At the time, it was the largest corporate takeover in history.
Afterward, Socal became Chevron, a California-based global giant, one of the largest industrial enterprises in the world, with 59,000 employees involved in producing and transporting oil and gas, refining fuel, providing geothermal energy and manufacturing petrochemicals.
Mr. Keller's bold acquisition said much about the petroleum industry and its reliance on a special blend of tradition and geology, of personality and exploration.
Petroleum supplies seemed limited, but demand appeared insatiable. As a result, company survival and growth required new oil fields or new ways of exploiting old ones. Or companies could buy oil fields controlled by others.
Mr. Keller had been regarded as an apostle of what Fortune magazine called in 1984 the "old-fashioned way," or searching out untapped sources and getting at them.
"We can find reserves cheaper ourselves," was one explanation Mr. Keller offered for shunning takeover attempts. Later, however, when demand appeared to decline, he was said to recognize a need for major consolidation in his industry.
Nevertheless, according to Fortune, Mr. Keller had a special reason for making a bid for Gulf. At the time, James E. Lee was the head of Gulf, which was increasingly beleaguered by a hostile takeover bid by Texas oilman T. Boone Pickens. Mr. Keller explained his company's actions this way: "The main thing that made us decide to try the acquisition was that I got a call from Jimmy Lee saying 'Help'!"
Because Gulf was one of the brotherhood of giant oil producers, Mr. Keller "felt he had to step in." Lee's call touched off intense hours of computation and calculation, factoring in cash flows, underground reserves and more.
The night before he was to make his presentation, Mr. Keller was said to have settled on an offer of $79 a share. But in the morning, just before going in to see the Gulf directors, he raised it by a dollar to $80. That added dollar provided the margin of victory.
The takeover allowed Chevron to double its crude oil reserves and immediately made it the third largest oil company, after Exxon and Mobil. Chevron now calls itself the second largest integrated energy company in the United States and one of the largest corporations in the world.
George Matthew Keller was born in Kansas City, Mo., grew up in Chicago, served in the Army Air Forces during World War II and graduated from the Massachusetts Institute of Technology. After joining Socal in 1948, he worked for a time as a refinery designer and became assistant vice president of foreign operations in 1968. Other executive posts followed until he became chairman in 1981. In the 1980s, activists protested Chevron's business dealings with the Marxist regime in Angola. Mr. Keller retired at the end of 1988.
Described in news accounts as candid, forthright and innovative, he was said to have eased conditions on overnight trips by stocking the company jet with air mattresses. When the hour grew late, he would break them out and inflate them himself.
His wife of 61 years, Adelaide McCague Keller, died last year. Survivors include three sons, Bob Keller, Barry Keller and Bill Keller, who is executive editor of the New York Times.