Seagram Co. added nearly 10 million shares of Conoco, Inc. stock to its holdings in recent days and is assured of owning at least 18 percent of E. I. duPont de Nemours & Co. after the chemical giant merges with Conoco.
Seagram announced that by midnight Wednesday it controlled 25.3 million shares of Conoco, for which it will pay $92 a share. Each of those shares is worth 1.7 shares of Du Pont stock under the terms of Du Pont's successful bid to acquire the nation's ninth-biggest oil company.
Seagram sought to acquire 51 percent of Conoco's 86 million outstanding shares in what became a three-way battle to acquire or control Conoco. Du Pont, the nation's biggest chemical company, won the fight with a $7.6 billion cash and stock offer for Conoco. Mobil, the mation's second-biggest oil concern, made the richest bid for Conoco -- $8.8 billion of cash and securities -- but investors shied away from Mobil because of fears that a Mobil-Conoco combination would be scuttled on antitrust grounds.
In a related development, Du Pont said it would exercise its option to buy 15.9 million Conoco shares from Conoco itself at $87.50 a share. Those shares, combined with the 38 million shares it purchased from Conoco shareholders at $98 each, give Du Pont majority control of Conoco and make certain that Conoco shareholders will approve a merger with Du Pont by the required majority.
Although Du Pont has in its control at least 47.3 million shares of Conoco, 9.4 million of those shares will be paid for in Du Pont stock that cannot be issued unless Du Pont shareholders approve the transaction at an Aug. 17 meeting.
Du Pont said today that it bought the 15.9 million shares from Conoco to make sure that Du Pont had control of Conoco "at the earliest possible date." Today's transaction means that the chemical giant will lay out nearly $5.2 billion in cash plus another $3.8 billion in stock (at current prices for Du Pont shares) to buy Conoco. That $9 billion outlay is more than twice the previous record price paid for a corporation.
Nevertheless, Du Pont will have to cope with Seagram, the big Canadian-based distiller, as a major -- and possibly the largest -- stockholder. Seagram will not comment on what it plans to do with its Du Pont position.
Many Wall Street sources have speculated that Seagram will trade its stock for Du Pont-Conoco assets, including Conoco's Consolidation Coal Co. the nation's second-biggest.
But Ralph E. Bailey, chairman of Conoco, told reporters today that such speculation was "utter nonsense." He said that both he and Du Pont Chairman Edward Jefferson feel that Consolidation is an essential part of the energy reserves of Conoco -- which will operate under existing management as a subsidiary of Du Pont -- and that coal will play a "more and more important" role in the U.S. energy picture.