U.S. District Court Judge John M. Manos yesterday rejected a plea from Mobil Corp. that he stay an order blocking the company's purchase of Marathon Oil.
Manos also turned down a Mobil plan designed to eliminate antitrust objections to the proposed merger.
On Monday, Manos granted Marathon a preliminary injunction barring Mobil from purchasing any Marathon stock until the court settles the question of whether the proposed takeover violates antitrust laws, giving U.S. Steel an edge in the bidding war for Marathon.
Yesterday Mobil sought to undo the damage on two fronts: first, asking Manos to stay his order, and second, asking a federal appelate court in Cincinnati to move swiftly to hear an appeal of the order.
In Cleveland, Mobil proposed to Judge Manos that he allow the proposed takeover bid to go forward under terms that would hold separate Marathon's refining and marketing operations..
Refining and marketing are the two areas where the strongest antitrust arguments against the proposed takeover have been raised.. Mobil was attracted to Marathon because of its oil and gas reserves, which Mobil intends to hang on to if it succeeds in its takeover bid..
Mobil proposed giving the court a plan within 60 days after its acquisition of Marathon to divest itself of the marketing and refining assets of the smaller company.
In Cincinnati, Mobil's attorneys asked the 6th U.S. Circuit Court of Appeals for an emergency hearing on its appeal of Manos' order. The court did not indicate if it will grant the request to hear arguments by next Tuesday. Unless a court changes the dates, the schedule set for proration dates and withdrawal dates under the Mobil and U.S. Steel tender offers are expected to favor U.S. Steel as long as serious legal questions remain about Mobil's bid.
Mobil said yesterday that unless the Manos order was promptly stayed or reversed, Marathon shareholders would be "impelled" to accept the competing offer from U.S. Steel..
In still another federal courtroom, arguments ended in a hearing on a challenge by Mobil to the agreement by U.S. Steel and Marathon. Marathon, which rejected a proposed $5.1 billion takeover bid from Mobil, agreed to a $6.25 billion takeover deal with the steel company. That agreement included two options to allow U.S. Steel to buy 10 million shares of Marathon stock and to acquire a major part of Marathon's valuable oil and gas reserves even if a third party acquires Marathon.
Mobil challenged those options as illegal and increased its offer to $6.5 billion, contingent on those options being overturned.