Kuwait completed its controversial $2.5 billion acquisition of Santa Fe International Corp. yesterday, filing final merger papers within hours after federal agencies gave their consent to the deal.
Santa Fe, a California-based oil exploration and drilling equipment firm, became a subsidiary of the state-owned Kuwait Petroleum Co., making it one of the largest U.S. enterprises to be acquired by an Arab oil state.
Lawyers for Kuwait Petroleum and for Santa Fe moved swiftly after the federal government's Committee on Foreign Investment in the United States announced that it had no objections to the takeover and the Justice Department terminated an antitrust inquiry.
"We have done it; we completed the transaction," said James R. Ukropina, Santa Fe general counsel. Santa Fe's stockholders had approved the takeover overwhelmingly on Dec. 1, and lawyers for the two firms were standing by in California and Delaware to file formal merger notifications as soon as the federal agencies gave their consent.
The Committee on Foreign Investment, an interagency group whose chairman is Assistant Treasury Secretary Marc Leland, said the transaction does not have "major negative implications for U.S. national interests."
According to administration sources, that announcement implied approval of the transaction by the Defense Department, which had questioned it because of the nuclear engineering activities of a Santa Fe subsidiary. Assistant Defense Secretary Richard Perle, a member of the committee, had expressed concern about possible nuclear proliferation in the Persian Gulf. But he joined in the committee's finding and signed its announcment, government sources said.
Santa Fe still is negotiating with the Department of Energy over the terms of a voting trust that would insulate from the Kuwaitis the knowledge of its C.F. Braun subsidiary, which has done nuclear engineering work for the Defense Department.
Creation of the voting trust was not a requirement for completion of the merger transaction, however, and the Energy Department already had announced that it had no objections to the takeover. Ukropina said it "won't be difficult" to work out an arrangement satisfactory to the Energy Deparment, and said "we intend to cooperate fully."
Completion of the transaction came as a surprise to Rep. Benjamin Rosenthal (D-N.Y.) chairman of the House Commerce and consumer affairs subcommittee, who has been a solitary congressional voice against the merger. Aides to Rosenthal said they could not understand why the investment committee and Justice Department had acted so quickly, and announced that Rosenthal would hold a hearing next Wednesday to discuss the actions of the committee and department.
Leland and Assistant Attorney General William Baxter, head of the Antitrust Division, are scheduled to testify, but because only their departments could have delayed the merger, the issue appears to be moot.
Still unresolved is the question of Santa Fe's mineral rights leases on federal land. Federal law prohibits a foreign country from holding such leases unless the Interior Department has certified that it is open to U.S. investment on a reciprocal basis.
Interior Secretary James Watt encouraged the Kuwait-Santa Fe deal, but the department has not found legal grounds for issuing a certificate of reciprocity sought by the Kuwaitis.