Coastal Corp., whose attempt to take over Houston Natural Gas Corp. last year was aborted in the midst of one of the nastier takeover battles in recent years, has set its sights on a new target -- and by all indications, Coastal is in for another fight.
Coastal has offered $2.3 billion for American Natural Resources, a Detroit-based energy production and pipeline company, in which it said it already owns an almost 5 percent stake.
But ANR Chairman Arthur Seder Jr., in an angry letter to Coastal Chairman Oscar Wyatt Jr. over the weekend, called Coastal's bid "entirely inadequate" and charged that Coastal would have to break up and sell ANR to pay for acquiring it.
"An unsolicited takeover proposition is not the way responsible business people go about seeking a business combination with another company on a negotiated basis," Seder wrote Wyatt in the letter, which was released by Coastal.
Yesterday, Wyatt replied to Seder that Coastal felt its offer was a good one, and Wyatt promised that ANR would not be liquidated if Coastal took it over. Seder could not be reached for comment yesterday.
Houston-based Coastal announced late Friday that it would begin a $60-a-share offer for ANR today. ANR stock closed on Friday at $54.75, up $4.125.
In making the offer, Wyatt sent a letter to Seder saying that he believed "a combination of Coastal and ANR would result in a substantial company." Together, the companies would have combined revenue of $9 billion and combined petroleum reserves of 1.3 trillion cubic feet of natural gas and 40 million barrels of oil.
Wyatt said he thought the two companies' exploration and production operations were complementary, as well as their extensive pipeline systems, and would give the combined company a strong position in the natural gas supply business for the midsection of the United States.
But Seder apparently disagreed. In his letter, he said that while Coastal's offer would be submitted to ANR's board, the company's management already had found it wanting. He also said, "There is no way in our judgment that Coastal could avoid a massive selloff of assets" to finance the acquisition, and he said he feared that in so doing, Coastal would force ANR to close its operations in many areas.
Replying to Seder's letter yesterday, Wyatt said he found Seder's objections "difficult to understand," and he accused Seder of "premature and uninformed misjudgments" that will mislead ANR's stockholders, employes and other constituencies.
So far, ANR's reaction to Coastal's offer is mild compared with what Coastal encountered when it made a $1.3 billion offer to take over Houston Natural Gas in January 1984. HNG countered with an offer of its own for Coastal -- a rare takeover defense known as the "Pac Man defense," after the video game in which characters try to gobble each other up.
Coastal also was attacked by Texas regulatory officials, who contended that a merger of the two companies would restrict competition in the state's natural gas market.
The two companies finally reached a truce, with HNG agreeing to pay Coastal $42 million and both companies dropping their takeover offers for one another.
Coastal, however, later had to pay a $230,000 civil penalty to the Federal Trade Commission, which charged that the company violated the Hart-Scott-Rodino Act by failing to report to the FTC that it was acquiring HNG stock in preparation for a takeover bid.