Maverick oilman T. Boone Pickens Jr., whose pursuit of Gulf Corp. last year led to the largest corporate takeover in history, yesterday said he and a group of partners would offer $60 a share for 10 percent of Phillips Petroleum Co. as the first step in an attempt to take over that company.
Pickens, who started in the oil business as a geologist at Phillips in 1951, said he and his group already had purchased 5.7 percent of the Bartlesville, Okla.-based oil company, the nation's ninth-largest oil company and 15th-largest industrial firm overall.
"It's an undervalued situation, and we see an opportunity to make money for both Mesa shareholders and Phillips shareholders," Pickens said in a telephone interview from his Amarillo, Tex., office yesterday. "We've made a very aggressive offer."
Phillips had no immediate comment on Pickens' offer.
At Pickens' offering price, it would cost more than $9.2 billion to acquire Phillips. But industry analysts said they expected, as in the case of Gulf, that Pickens' overtures would attract other corporate suitors to Phillips. The eventual purchase price, they said, could be as high as $11.5 billion. That would make it the second-largest takeover ever, behind the $13.2 billion buyout of Gulf by Chevron Corp. earlier this year that was inspired by Pickens.
Wall Street has been waiting for months for Pickens to make a move against another oil company, with much of the speculation centering on Phillips. Pickens and a group of partners made $780 million when they sold their Gulf holdings to Chevron, and Pickens has been gathering financing for a new bid for some time.
Under the terms of the offer announced yesterday, Mesa Partners, the group headed by Pickens and including other Texas investors who also joined him in the Gulf offer, will pay $60 a share for 15 million of Phillips' 154 million shares. It said it would seek an additional 8 million shares at the same price as soon as it can line up financing, and it would then attempt to take control of the company.
Pickens said yesterday he has not yet decided how to proceed with a takeover of the entire company once he obtains his initial stake, which he expects to take about 30 days. He said, however, he didn't expect to have any trouble raising money to bid for all of Phillips, and might add additional partners to do so. "There are several ways to do deals," he said. "We wouldn't have started on it if we couldn't have done it."
If his group bids for all of Phillips, he said, the offering price would remain at $60 a share. Phillips stock rose $3.37 to $48 in very active trading on the New York Stock Exchange yesterday, even though the Pickens offer was announced after the market had closed.
Although some analysts believed that Pickens' bid for Gulf last year was a bluff to draw out a higher offer, they said that his attempt to buy out Phillips appears to be legitimate. "I think this is a bona fide takeover attempt," said Sanford Margoshes, an analyst at Shearson Lehman American Express. However, he added, he expects other bidders for the company to surface, either a "white knight" solicited by Phillips' management or "gray knights" bidding on their own.
"It's quite possible that Phillips management will seek the aid of a white knight," Margoshes said. "Either the Mesa group or a gray or a white knight will complete the process of absorbing Phillips."
Margoshes set the range of realistic prices for Phillips at $60 to $75 a share, with the most likely bid at about $66 -- "That just happens to be the logo of the company," he said.
Pickens said he wasn't sure whether another offer for Phillips might materialize. "If we got a competing offer I don't think it would surprise me," he said. "It wouldn't surprise me not to get a competing offer, either."
Pickens, who refused to engage in "greenmail" against Gulf by selling his shares in that company back to it at a price higher than what Gulf would offer its other shareholders, said his group would similarly not accept an offer for their Phillips shares unless the same offer was made to other Phillips shareholders.
Pickens' group filed suit in several states yesterday to overturn various local takeover laws that could hamper the buyout attempt. It also filed suit in federal court in Delaware to reverse a 1983 standstill agreement that prevents Mesa Petroleum from buying any stock in General American Oil Co. of Texas, which Mesa attempted to take over two years ago. General American has since been purchased by Phillips.