U.S. Supreme Court Chief Justice Warren Burger yesterday dealt the final blow to Mobil Corp.'s expensive and controversial attempt to take over Marathon Oil Co., handing a victory to U.S. Steel Corp.
Shortly after 12:01 a.m. this morning, U.S. Steel directed Bankers Trust Co. to initiate acceptance of Marathon shares that had been tendered to the steelmaker--the first possible moment when it could legally proceed with its tender offer.
Burger issued a statement at 4:40 p.m. yesterday denying Mobil's emergency application for an injunction against U.S. Steel's purchase of Marathon--a desperate, last-ditch maneuver that had Mobil's attorneys bouncing from court to court during the last two weeks.
With that denial, Burger ended the long and bitter takeover fight. In it, Marathon deployed high school marching bands and public opinion from its headquarters in Findlay, Ohio, against Mobil, helped marshal congressional opposition to the takeover and struck an agreement to merge instead with U.S. Steel, which promised to keep the company intact and in Findlay.
The stakes were enormous. The Mobil bid that failed would have amounted to approximately $6.5 billion; the winning U.S. Steel bid was about $6.3 billion.
What Mobil had wanted was Marathon's large oil and gas reserves, including substantial holdings in the productive Yates Field in Texas. In buying the company, Mobil could have acquired domestic reserves for about half the cost of finding them through exploration.
What got Mobil in trouble was Marathon's opposition and antitrust arguments that were raised against the proposed combination of the nation's second-largest and 17th-largest oil companies. Most of those concerns centered on the companies' strong gasoline marketing operations in the Midwest.
Mobil had sought to have the Supreme Court review lower-court rulings that its bid for Marathon would violate antitrust law and had asked the court to enjoin U.S. Steel from buying Marathon until that review was considered. Burger denied the application, saying that the prerequisite for the extraordinary relief had not been satisfied.
He also noted that he had informed the other members of the court of his decision and that no one had dissented. In doing so, Burger was saying to Mobil, in effect, not to petition the other justices. That would have been the only other ploy left to the oil giant.
Mobil spokesman John Flint said that the company was waiting to see what the court had said. "We will study it and certainly evaluate our overall position," he said.
A U.S. Steel spokesman said the company would begin purchasing stock as soon as it was legally cleared to do so. More than enough shares had been tendered to U.S. Steel to ensure the success of its offer.
"We view Chief Justice Burger's decision with a great deal of satisfaction," said Kent B. Hampton, Marathon's vice president and general counsel. "From the beginning, we have maintained that Mobil's bid, if allowed to proceed, would violate both the spirit and the letter of antitrust laws."
Hampton said that U.S. Steel "has given assurances that Marathon will remain a strong competitive force in the oil industry," and he called the merger with the steel producer in the best interest of both shareholders and consumers.
The takeover fight began last Oct. 30, when Mobil announced that it was seeking Marathon and unveiled an offer of $85 a share and an additional exchange of notes for stock. That offer was evaluated at $5.1 billion.
Marathon's directors rejected the offer and sought a "white knight" alternative buyer. On Nov. 19, Marathon and U.S. Steel announced that they had agreed to merge, with U.S. Steel paying $125 a share for Marathon's stock. Mobil later topped that with a $126-a-share offer, and still later filed papers with the Federal Trade Commission indicating that it might try to acquire control of U.S. Steel to wrest the Yates Field properties from the steel company.
Although that option is still open to Mobil, oil industry analysts said yesterday that it seemed the least likely strategy Mobil would pursue.