The Sixth Circuit U.S. Court of Appeals yesterday turned down Mobil Corp.'s emergency request for a delay of rival U.S. Steel Corp.'s purchase of Marathon Oil Co.--leaving Mobil less than 56 hours to try to stop the clock on U.S. Steel.
Mobil said it would move its appeal immediately to the U.S. Supreme Court, where such an appeal was rejected last week on the grounds that Mobil had not sought an injunction in the lower courts first.
Unless the Supreme Court grants the Mobil request or another bidder steps in, U.S. Steel can begin buying Marathon stock after midnight Wednesday night. At that point, Mobil will have lost its costly and probably publicly damaging bid for the smaller company. Industry analysts and other followers of the takeover dispute say they don't expect another suitor to enter the bidding.
Mobil, the nation's second-largest oil company, sought Marathon, the nation's 17th-largest oil firm, tempted by the smaller company's large domestic oil and gas reserves. In the pursuit of Marathon, Mobil found itself the target in Congress and elsewhere of critics of increasing corporate concentration and of Marathon's board of directors. Marathon sought a merger with U.S. Steel to fend off Mobil.
The appeals court in Cincinnati said yesterday that U.S. District Court Judge John M. Manos had not abused his discretion when he opted not to reconsider a preliminary injuction against Mobil.
Mobil had sought reconsideration on the basis of its agreement -- arrived at after its antitrust problems surfaced--to spin off to Amerada Hess Corp. all of Marathon's marketing, transportation and refining operations.
It was in Manos' courtroom in Cleveland where Mobil's antitrust problems began, where both its original offer of $85 a share and its second offer of $126 a share for Marathon were blocked. U.S. Steel's $125-a-share offer (and an additional trade of notes for stock) is valued at approximately $6.3 billion. The antitrust arguments against the Mobil bid focused on the combined market share in gasoline marketing of Mobil and Marathon in six midwestern states.
The appeals court said that Manos' refusal "wasn't an abusive discretion since there is no showing that such an agreement would cure the probable antiturst violations."
A Mobil spokesman said the firm was not surprised by the appeals court decision. Mobil made it clear from the moment U.S. Supreme Court Chief Justice Warren Burger turned down its request on procedural grounds that it would move as swiftly as it could to bring the request back, cured of its defects.