Occidental Petroleum Corp. yesterday took its bid to takeover Cities Service Corp. directly to Cities shareholders with a tender offer for half of the company's stock at $50 per share.
The hostile Occidental bid to acquire Cities comes two days after Cities' board of directors rejected Occidental's friendly $3.8 billion offer of cash and securities.
The Occidental bids follow a $63-a-share offer by Gulf Oil Corp. that collapsed Aug. 6 when Gulf withdrew the proposal, citing antitrust objections to the move.
The proposal, outlined in an Occidental announcement yesterday, is similar to the earlier one, with Occidental offering cash for 49 percent of Cities' stock and securities for the remainder.
A merger between the two companies would create the nation's eighth-largest oil company and 12th-largest industrial firm. Together the two firms have $23.6 billion in sales.
Occidental will file its tender offer formally with the Securities and Exchange Commission today, starting the clock on the 20-day waiting period before it can legally purchase any Cities Service shares.
Cities Service Chairman Charles J. Waidelich yesterday urged Cities shareholders to "reserve judgment" on the Occidental offer. Waidelich said the Cities board of directors would meet soon to discuss the Occidental move.
Wall Street analysts yesterday predicted Occidental will be successful in getting Cities Service shareholders to tender at least 49 percent of the company's shares. That expectation is based on the premise that no new bidders emerge for Cities Service in the next few days.
Occidental indicated yesterday that it expects Cities Service shareholders to accept readily its $50-per-share offer, announcing that no dealer fees would be offered to brokers for soliciting Cities Service shares.
The company placed no time limit on its tender offer and said the offer to purchase Cities shares is not conditional upon a minimum number being tendered.
Cities Service officials said yesterday that discussions are proceeding with "a number of companies" interested in acquiring all or part of Cities Service, but refused to disclose any names.
Occidental officials said that after completion of the offer it intends "to seek to consummate a merger or a similar combination" between Cities Service and Occidental.
But officials at Occidental said they had not yet determined what to offer Cities shareholders who do not tender their shares to Occidental under the initial $50-per-share cash offer.