Unocal Corp. yesterday moved to thwart a takeover by corporate raider T. Boone Pickens Jr. by announcing that it will buy back 49 percent of its stock for notes worth $6.28 billion if Pickens' current tender offer succeeds.
Unocal, the parent of Los Angeles-based Union Oil Co. of California, said its board authorized a package of debt securities worth $72 a share for the company's remaining 87.2 million shares of common stock if the Pickens offer is successful.
This means that if Pickens' group gains control of Unocal, it could be faced with a prospect of taking on a massive debt as well.
Pickens, the chairman of Amarillo, Tex.-based Mesa Petroleum Co., heads a partnership that already owns 13.6 percent of Unocal's 173.9 million shares and that is offering $54 a share, or $3.46 billion, to increase that stake to 50.1 percent. The offer expires May 3. If successful in that move, the Pickens group has said it will seek to buy the remainder of the company for $54 a share in debt securities.
The total buyout price by the Pickens group would be $9.21 billion, including the $1.1 billion it already has spent buying stock.
The Pickens group yesterday dismissed Unocal's exchange offer as a "highly conditional poison pill" designed to deprive Unocal's shareholders of the chance to participate in the partnership's offer for Unocal stock. Unocal's board had unanimously rejected the Pickens tender offer on Saturday as "grossly inadequate."