A federal judge in Los Angeles yesterday gave oilman T. Boone Pickens Jr. a major victory in his attempt to gain control of Unocal Corp. by ordering Unocal to postpone its annual meeting so that the company can correct "misleading" information in its proxy statement.
The meeting, which was scheduled for Monday in Los Angeles, was ordered postponed until May 13 or later.
The court action gives Pickens more time to lobby shareholders in favor of his $54-a-share, $3.4 billion offer for 51 percent of Unocal, formerly Union Oil Co. of California. Unocal has made a counterbid of $72 a share for 29 percent of the stock.
Pickens, the chairman of Mesa Petroleum Co., said that even with yesterday's ruling he would continue to push for shareholder approval of a further adjournment, or postponement, of the meeting to give the shareholders time to sort out the increasingly confusing situation.
"We will continue to go for adjournment, but two weeks is going to help the stockholders immeasurably on the deal," Pickens said in an interview from his Amarillo, Tex., headquarters. "It looks like the judge out there is looking after the Unocal stockholders. . . . He knows that the stockholders are having trouble sorting through this thing."
Unocal said it would comply with the judge's ruling and not appeal it. The company rescheduled the meeting for May 13 and said the new proxy information would go out to shareholders no later than next Tuesday.
But a Unocal attorney, James Robertson, was quoted by the Associated Press as telling the judge after the ruling, "You've given Mesa what they've been asking for all along. I don't know if we can correctly weigh the damages that may have been inflicted."
The ruling, by U.S. District Court Judge Wallace Tashima, did not go entirely in Pickens' favor. The judge also found that Pickens had not adequately disclosed his intentions in filings with the Securities and Exchange Commission in connection with the accumulation of 13.6 percent of Unocal's stock by Mesa Partners II, an investor group led by Pickens.
As a result, the judge ordered Pickens to extend the deadline for his offer for Unocal stock until at least May 10 so the filings could be corrected and disseminated to Unocal shareholders. But Tashima stopped well short of honoring Unocal's request that Pickens be barred from voting on any company matters with 11 million of his 23.7 million Unocal shares. Judge Tashima called that attempt to "sterilize" Pickens' shares "an extreme remedy not warranted."
Judge Tashima said Unocal should delay its meeting so it can send to stockholders corrected versions of its proxy materials, reflecting changes that were made in corporate rules as the battle with Pickens has raged in recent weeks. Tashima noted, for instance, that the proxy materials did not include a ruling by a Delaware court earlier this week barring Unocal from ignoring any proposals to shareholders that Pickens might make if the meeting were postponed.
Tashima's ruling settles some of the key issues in the complicated battle between Pickens and Unocal, but others still remain. Pickens is attempting to get courts to void some of Unocal's defense mechanisms against him, and also wants to force Unocal to let him make proposals to shareholders to be voted on at the annual meeting when it is finally held. Unocal has fired its own legal salvos back at Pickens.
The delay in the meeting ordered yesterday, however, will give each side a chance to find out what Unocal shareholders think of their respective offers.
Unocal has argued that Pickens' $54-a-share bid is inadequate, and answered with its own $72-a-share bid for part of its stock. That offer is not available to Pickens, Unocal claims -- something Pickens also is litigating -- and is seen by analysts as a "poison pill" that will frustrate Pickens' efforts both by presenting Unocal shareholders a better offer and increasing the company's debt, thus making it a less attractive takeover target.