Marathon entertained a proposal from the chairman of "a major oil company" as well as United States Steel's offer in its search to derail Mobil Corp.'s takeover bid.
According to papers filed with the Securities and Exchange Commission yesterday, the board "considered an oral proposal from the chief executive officer of a major oil company to acquire the company at an average price of $120" a share.
Mobil, which has offered $85 a share, or $5.1 billion for Marathon, continued its silence about the U.S. Steel bid yesterday. Estimates of the price U.S. Steel will pay if its offer succeeds, which ranged from $6.1 billion to $7.2 billion on Thursday, settled down yesterday to approximately $6.2 billion--or approximately $106 a share. Some of the confusion about the price resulted from how bonds to be exchanged for stock are valued.
The oil company executive, who made the oral proposal and who was not identified, told Marathon that his company would drop its bid if Marathon won the antitrust case it has filed against Mobil. Such a decision would probably be a roadblock for any other oil company considering jumping into a bidding war for the smaller oil firm.
Marathon's filing said that, in weighing the U.S. Steel offer and the oil company's oral proposal, it was advised that there were "major antitrust obstacles to an acquisition of the company by the oil company which would make it highly questionable that the company's shareholder's would ever receive the consideration proposed to be offered to them." The board also believed it would take more time to put that proposal together than U.S. Steel's.
The board also considered other oral proposals, according to the filing, but decided U.S. Steel's was the best bet.
Although the oil company and its chief executive were not identified, there were indications from at least one source that the company was not Texaco. Texaco's chairman said earlier this week, before the announced agreement between Marathon and U.S. Steel, that Texaco had been approached by investment bankers representing Marathon and by major shareholders, but there was nothing to indicate that the approach came from Marathon management.