More than two-thirds of the Marathon Oil Co.'s shareholders voted today to approve a merger with U.S. Steel Corp., writing the final chapter in one of the bitterest takeover fights in recent years.
The vote ended a long, contentious meeting in which dissident shareholders protested Marathon management's decision to embrace U.S. Steel--a decision made when Marathon was fending off an unfriendly takeover bid by Mobil Corp.
At one point in the meeting, interruptions by a protesting shareholder provoked Marathon President Harold D. Hoopman to threaten to cut off his microphone. "Let's be courteous with each other or we'll get rough with each other, fella," said Hoopman. "I'm a roughneck."
The meeting to decide the final phase in U.S. Steel's $6 billion takeover of the nation's 17th-largest oil company began with a motion to approve the merger, followed by a motion by dissident James B. Hoy to adjourn until a larger meeting room could be found.
Marathon said that 334 shareholders attended the meeting, filling the main conference room at Marathon's headquarters here and two adjacent rooms where shareholders could watch the proceedings on closed-circuit television. Still others were accommodated across the street at the Benevolent and Protective Order of the Elks lodge, where press quarters and additional large-screen, closed-circuit monitoring of the meeting had been set up. Approximately 450 Marathon employes who are shareholders watched the meeting on closed-circuit TV in the employes' cafeteria.
Shareholders who opposed the merger argued that the estimated $75 value of the 12-year, 12 1/2 percent U.S. Steel notes was too low. Those notes will be exchanged for most of the shares of Marathon not acquired in the first phase of the takeover.
By the time the meeting began, it was clear that there was little chance of blocking the merger. Earlier this week, a federal judge in Cincinnati refused to stop the merger meeting as dissidents had urged.
Dissenting shareholders acknowledged at the meeting that the merger would be approved but urged shareholders to vote no to retain the right to appraisal of the value of their stock. Under Ohio law, shareholders who oppose a merger may ask the courts to establish a fair market value for their shares.
Moments after the meeting began at 10:00 a.m., Hoy, representing a dissident group called the Marathon Shareholders Committee, moved that the meeting be halted until a large-enough room could be found to accommodate all shareholders attending "what probably is the last meeting of their company." U.S. Steel, which already had acquired 51 percent of Marathon's shares for $125 a share in the first phase of the acquisition, made short work of the motion to adjourn, voting it down.
Hoopman was clearly uncomfortable in the early stages of the meeting. "I'm a mechanical engineer who's accustomed to running a fine oil company, not running a meeting this technical," he said.
Hoopman defended the decision to merge with the giant steel company, reminding shareholders how close the company was to being acquired by Mobil for a lower price. Marathon management scrambled to find an alternative, he said. "Of those contacted, only U.S. Steel was free of antitrust problems and was willing and financially able to make an offer acceptable to your board."
Hoopman and others warned that, if the merger were not approved, the remaining Marathon stock would drop in value.
"There is very broad dissatisfaction with the merger agreement," said Frances Armstrong of the Marathon Shareholders Committee. "Shareholders have asked us why Marathon management is forcing them out of the company." Another committee member, James H. McElroy, faulted Marathon management for filing an antitrust suit against Mobil's bid for the company. Raising the antitrust issue "locked out the best potential bidders in this contest," he said, noting that it discouraged other oil companies from competing with Mobil. "You've got many shareholders who are very unhappy and who feel they have been sold down the river," he said.
The battle that led to the merger vote began last Oct. 31 ("Halloween," Hoopman noted) when Mobil Chairman Rawleigh Warner called Hoopman to announce Mobil's intention to make a bid for Marathon. Mobil's main target in the takeover bid was Marathon's substantial oil and gas reserves. Mobil offered $85 a share for up to 40 million shares of Marathon's stock.
Marathon management had been anticipating a takeover bid, according to Hoopman, and was prepared and moved immediately to block Mobil. On Nov. 18, Marathon management reached agreement with U.S. Steel for a friendly takeover at a substantially higher price. The battle then was played out in the courts and elsewhere, with the final blow to the Mobil offer coming in early January when Supreme Court Chief Justice Warren Burger rejected Mobil's plea to block U.S. Steel. On Jan. 7, U.S. Steel completed the first step in the takeover, buying 51 percent, or 30 million, of Marathon's shares.
Ohio law requires that two-thirds of the company's shares be voted in favor of a merger for it to be consummated. The merger meeting was adjourned for several hours while election inspectors counted the votes. The adjournment lasted from 11:00 a.m. to 4:30 p.m. At that point, the election inspectors announced only that more than two-thirds of the company's outstanding common stock had been voted in favor of merger, without giving any totals.
"That's interesting, and thank you very much," said Hoopman, who then declared the merger adopted and the meeting adjourned.