E. I. du Pont de Nemours & Co. apparently has won its quest to acquire Conoco Inc., the nation's ninth-largest oil company, in what is the most expensive takeover battle in U.S. corporate history.
But Wall Street sources said that the Justice Department's tentative decision yesterday to give a green light to Du Pont's $7.3 billion bid and delay for 10 days on antitrust grounds, the richer, $8.2 billion offer from Mobil Corp., could produce a confusing and possible Pyrrhic victory for Du Pont, if the third contender Seagram Co. does not change its bid.
The terms of the Du Pont offer might mean that the big Canadian distiller Seagram will become a major stockholder in a merged Du Pont-Conoco company and a big enough force to extract concessions from Du Pont.
However, early this morning Seagram indicatd it would change its offer for conoco. Seagram sources declined to say what the distiller planned to do, but they indicated the Candian compnay was debating whether to try to top the Du Pont cash offer or withdraw from the race.
Assistant Attorney General William Baxter, in asking Mobil for more information on its merger offer, cautioned that the request does not reflect "even a tentative judgement that the acquisition would be impermissible." But the requests prevents Mobil from paying for Conoco stock unitl after Aug. 10. Du Pont plans to begin paying Conoco shareholders on Aug. 5, and Seagram wants to start paying today. Mobil, the second-largest oil compnay in the country, said it would have been "happier" if it had received an early clearance like Du Pont, said it felt it would be able to satisfy the Justice Department's request "in a short period of time" and that the company's board of directors "will consider early next week what further action to take."
Later yesterday the Justice Department said the agency "doesn't have an agreement" until Du Pont files an acceptable consent decree dealing with a joint venture between Conoco and Monsanto Co., another major chemical firm. Justice said earlier yesterday the joint venture represented the only objection it had to a Du Pont-Conoco merger.
Seagram's current offer, which the company plans to revise by 11 a.m. today, is to pay $92 a share for up to 44.35 million shares of Conoco stock, a $4.08 billion bid for about 51 poercent of Conoco's stock. Seagram, which long ago cleared the Justice Department's antitrust screen, had planned to begin writing checks to Conoco stockholders today.
Conoco, which wants Du Pont to win, may have thrown a kink into yseagram's plans, however. Late yesterday it announced that it had obtained a restraining order from a North Carolina county court stopping Seagram from going ahead with its offer because a Conoco-Seagram combination would violate that state's liquor laws.
Du Pont will pay $95 a share for 38.7 million shares and exchange 1.7 shares of its stock for each of the remaining 48 million or so shares. But all the Conoco shares Du Pont is willing to pay cash for have been claimed.
Anyone who wants cash for their Conoco shares either will have to ship them to Seagram -- which has guaranteed it will but every share offereed up to 44.35 million - or to Mobil, which is offering $105, and take the risk that the Justice Department will approve the merger.
"Mobile will have to offer an awful lot more than $105 a share to justify the risk. The only option a shareholder [wanting cash] has now is to tender to Seagram today or tomorrow or wait until Monday to see what develops," a major Wall Street stock speculator said yesterday.
Since Du Pont had 9.5 million Conoc shares in tow seeking stock rather than cash, it has baout 56 percent of Conoco stock in hand. Barring a wholesale withdrawl of stock from Du Pont before Aug. 4, Du Pont will end up with control of Conoco.
If Seagram substantially sweetens its offer, it may pull some shares from Du Pont. Even if it does not, and chooses to maintain its current offer, it is likely to pick up much of the remaining Conoco stock. However, Wall Street sources said, at the current price for Du Pont stock, Seagarm would be paying $14 more pershare by keeping its current offer, then exchanging those shares under the Du Pont deal, then it would have to pay by purchasing Conoco stock on the open market. Therefore, observers concluded, Seagram, which had 17 million shares of Conoco stock as of last Sunday, will either try to outbid Du Pont or withdraw.