Marathon Oil Corp.'s largest shareholder said yesterday it will tender its stock to U.S. Steel Corp. because it believes Mobil's takeover offer will fail, and another major shareholder, National City Bank of Cleveland, said it also will add its shares to the steel company's pool.
B. Gill Clements, president of Sedco Inc., a Texas oil drilling firm that owns 4.41 million shares of Marathon, said he believes that most of Marathon's shares will go to the steel company. Sedco's holdings represent a 7.7 percent stake in the sought-after oil company.
A bank official said it will tender its holdings of approximately 5 percent of Marathon's stock to U.S. Steel.
Last midnight was the deadline for shareholders to tender stock to either of the two competing bidders in order to get a higher cash price for their shares. With Mobil's offer temporarily blocked and even more in doubt than U.S. Steel's offer--which itself faces challenges--shares began moving to the steel company.
Even so, if Mobil announces a new offer in a joint venture with another oil company, as expected, stockholders could withdraw their shares from U.S. Steel and tender them to Mobil before a new pro rata deadline that would be part of that offer. Mobil has said it will make such a proposal, which would be aimed at overcoming antitrust objections to its bid. Speculation on Mobil's possible partner has centered on Amerada Hess.
Hess officials have been unavailable for comment, and Mobil has not named the company with which it is negotiating.
"It's an imaginative effort on the part of Mobil to meet the antitrust objections, but a rather belated effort," said Sanford Margoshes, an oil industry analyst with Bache Halsey Stuart Shields. "If it had been initiated at the start of the bidding, Mobil might have carried the day," he said. Margoshes said he believes the chances are two out of three that U.S. Steel will prevail.
The deadline from withdrawing shares from either U.S. Steel or Mobil will depend on how soon a federal judge in Columbus rules on Mobil's challenge to the merger agreement between Marathon and U.S. Steel.
Yesterday U.S. District Court Judge Joseph Kinneary in Columbus extended the restraining order temporarily blocking the U.S. Steel bid. Kinneary said the order will remain in effect until next Wednesday or until he issues a ruling on Mobil's request for a preliminary injunction against the Marathon-U.S. Steel deal.
Mobil has asked the court to strike down key provisions of the agreement that grant U.S. Steel the right to acquire 10 million shares of Marathon stock at $90 each and an option to acquire valuable oil and gas reserves even if a third party takes over Marathon.
There was no indication as of late yesterday whether the Federal Trade Commission will ask U.S. Steel for more information about its bid for Marathon. Such a request would indicate that the FTC is concerned about possible antitrust implications of that proposed merger.
The FTC is reviewing information submitted by Mobil and is expected to indicate its attitude toward that combination by Dec. 10.