The board of directors of Zapata Corp., an offshore-oil-drilling company with headquarters in Houston, voted unanimously Monday to reject a merger proposal by Occidental Petroleum Corp., apparently ending Occidental's overtures.
Zapata's chairman and chief executive officer, B. John Mackin, said the board considered the proposed stock swap that amounted to roughly $33 to $36 a share "grossly inadequate" and said that Zapata's investment banking firm, Lazard Freres & Co., concurred in that assessment.
Zapata does not intend to make a counterproposal to Occidental, Macklin said.
Occidental Chairman Armand Hammer said that his firm won't make another bid for Zapata. He also noted that Occidental's investment advisers, Donaldson, Lufkin & Jenrette Securities Corp. and Merrill Lynch, Pierce, Fenner & Smith Inc., considered the Occidental offer adequate.
"Given the vote by the board, for all intents and purposes, it's dead," an Occidental spokesman said of the merger proposal.
Occidental made the offer earlier this month, apparently with encouragement from David H. Murdock, the largest shareholder in Zapata. Murdock was also the largest shareholder in Iowa Beef Processor Inc., which Occidental acquired last month.
Analysts who follow Zapata's stock said at the time of the offer that it was low. The year's high for Zapata was 39 7/8, but the stock closd at 27 3/4 on the Friday before the offer.
Occidental had sought Zapata as part of its plans to spend approximately $2 billion on offshore drilling over the next five years. Zapata is the second-largest operator of offshore rigs and explores for oil in the Gulf of Mexico, where Occidental also is active.
Zapata was founded by Vice President George Bush, who no longer has an interest in the firm. The company had revenues of $637 million and net income of $43.6 million in the fiscal year ended Sept. 30.
Occidental, the nation's 20th-largest industrial corporation, had revenues of $12.5 billion and net income of $710.8 million in 1980.