Maverick oilman T. Boone Pickens Jr. today launched a $3.4 billion offer to gain control of Unocal Corp., his fourth raid on a major oil company in the past three years, but one that analysts said probably will give him the most problems.
Pickens, chairman of Mesa Petroleum Co., said he hoped eventually to buy all of Unocal's stock, which would be worth about $9.7 billion.
The offer was not unexpected on Wall Street. A group of investors headed by Pickens already owns 13.6 percent of Unocal's stock, and Pickens has indicated he plans to make a run at the Los Angeles-based company, formerly known as Union Oil Co. of California.
In a brief statement, Unocal said its board would consider the offer sometime in the next two weeks. But Fred L. Hartley, the oil company's chairman and president, has in the past spoken derisively of Pickens' actions against other oil companies and vowed to give Pickens a tough battle if he made an attempt to take over Unocal.
Last week, when Pickens attempted to shake Hartley's hand before a congressional hearing at which they both testified, the Unocal executive brushed him away.
Unocal already has taken several steps to defend itself against Pickens, including suing him for alleged violation of securities laws and changing its corporate charter to make a takeover or change of control much more difficult.
"He's got a much more difficult foe this time with Hartley than he did with the others," First Boston analyst William Randol said of Pickens and his previous targets, including Gulf Corp., Phillips Petroleum Co. and Cities Service Co. Pickens could not be reached for comment.
Pickens' group said it would pay $54 a share for 64 million shares of Unocal, enough to boost the group's holding to 51 percent of the company. Unocal stock closed on the New York Stock Exchange at $49.62 1/2, up 87 1/2 cents. It has been rising since Pickens first indicated an interest in Unocal earlier this year.
The offer, which is to expire May 3, is conditional on Pickens' group obtaining enough financing to purchase the shares. Pickens said Drexel Burnham Lambert -- which specializes in raising large amounts of money through highly speculative "junk bonds" -- is trying to assemble $3 billion in financing for the takeover bid, while the group hopes to borrow another $1.1 billion from banks.
Pickens and his partners, who include Mesa and some Texas investors, have made about $1 billion in recent years with hit-and-run raids on major oil companies. Most recently, Pickens attempted to gain control of Phillips Petroleum Co., only to drop out -- at a handsome profit -- when Phillips mounted a strenuous defense and Pickens found he could not raise enough money to gain control.
Phillips is now going through a drastic refinancing, exchanging half of its stock for more than $4 billion in debt, as a result of a second takeover attempt by another raider, New York financier Carl C. Icahn.
Pickens repeatedly has averred that he actually wants to take over and control a major oil company. But critics have charged that he is only interested in making a play on a company to increase the value of his stock holdings, either through a buyout of his holdings, a restructuring like Phillips' or the entry of a "white knight" that will make a better offer for the target company -- as was the case with Chevron Corp.'s record $13.2 billion takeover of Gulf last year, which made Pickens and his partners a profit of almost $800 million.
Hartley has vowed not to restructure his company or pay "greenmail" to a raider such as Pickens to get rid of him. And analysts said yesterday that Pickens might have problems using any of his previous tactics to make money on his Unocal investment.
"He had better be ready to take this one over," Randol said. "I don't see any white knights out there."
"I think we are running out of white knights," said Sanford Margoshes, an analyst at Shearson Lehman Brothers, although he also said that Unocal "may not have too many options" in defending itself against Pickens.
One possible alternative for Unocal, Margoshes said, might be to try to take over another company, thus making itself too large for Pickens to take over, or even to make a bid for Mesa itself -- a rare takeover tactic known as a "Pac-Man" defense.
But Margoshes guessed that it was more likely that Unocal eventually would have to find itself doing something similar to Phillips' tactic -- swapping debt for stock to raise its stock value and shoo Pickens away.
While Pickens' previous large-scale takeover attempts have ended in pretty much the same fashion -- with he and his partners walking away from a takeover attempt empty-handed, save for a hefty profit on their investment -- each effort has sparked a spirited takeover battle replete with legal and financial maneuvering and heated rhetoric by Pickens and his target.
Randol said today that he expects the impending battle for control of Unocal to be no exception, except that "I think this one is going to be even more unpredictable."