A federal judge in Cleveland yesterday rejected a request from Mobil Corp. to lift a temporary restraining order imposed Sunday barring Mobil from taking any further action to implement its $85-a-share bid for control of Marathan Oil Co.
"In the absence of the order, it appears that Marathon and its shareholders will suffer immediate and irreparable harm which would outweigh any potential damage to the defendant," U.S. District Judge Frank J. Battisti ruled following a hearing on Mobil's motion.
Battisti said Marathon has "raised serious questions under the Clayton Antitrust Act, and the status quo should be maintained" until a full hearing for a preliminary injunction is concluded. A hearing for a preliminary injunction in the antitrust case filed by Marathon has been scheduled for Nov. 10., in Cleveland, by U.S. District Judge John Manos.
On Friday, Mobil, the nation's second-largest oil company, announced a $3.4 billion tender offer for as many as 40 million shares, or 67 percent, of 16th-ranked Marathon, based in Findlay, Ohio. Mobil has also said that it intends to acquire shares beyond the 40 million in a securities trade, which would take the cost of the entire package to $5.1 billion.
Attorneys for Marathon, which rejected Mobil's offer as "grossly inadequate" on Monday, said in court yesterday that Battisti's order was necessary to stop speculators and professional traders from buying up company stock for short-term gains. Arguing that Mobil and Marathon were in direct competition, Marathon lawyer Patrick F. McCartan said that the antitrust issues should be settled before the tender offer is allowed to go forward.
Mobil's lead attorney, former assistant attorney general for antitrust Sanford M. Litvack, argued that the judge's order was "not necessary and inappropriate" and would harm small shareholders who wouldn't be able to receive information about the offer.
Rejecting Marathon's contentions that the takeover proposal raised the specter of antitrust violations, Litvack said the temporary restraining order was inherently unfair and tilted the balance in favor of Marathon's management. Because it prevented Mobil and its agents from advertising or disseminating any information about the takeover bid, the TRO put Mobil "in an impossible situation," Litvack said. "When Marathon comes out and says, 'the offer is inadequate,' we can't respond," Litvack said.
Instead of lifting the restrictions on Mobil, however, Judge Battisti yesterday modified his order to enjoin Marathon as well from issuing any press releases or other public announcements on the tender offer except for announcements that are required by law or court order.
Lawyers for both sides said that in light of the decision, they had no comment.
Judge Battisti's order will remain in effect until Nov. 10 or until further order of the court.