A Delaware judge ruled yesterday that Unocal Corp. must extend to an investor group led by Mesa Petroleum Co. Chairman T. Boone Pickens Jr. an offer made to other shareholders to buy 29 percent of the company's stock for $72 a share.
Unocal had no immediate comment on the decision, the second in recent days to go against the Los Angeles-based oil company. A federal district judge in Los Angeles on Friday ordered Unocal to delay its annual meeting two weeks to May 13 to give shareholders time to digest the developments in Unocal's fight against a Pickens-led takeover.
The same federal judge yesterday declined a request by the Pickens group to order Unocal to include the group in its stock-purchase offer, but the Delaware judge already had done so.
The judge in Delaware -- the state in which Unocal is incorporated -- ruled that the company cannot "proceed in any way" with its $3.6 billion offer unless Pickens' group can participate "to the same extent and in the same manner" as other Unocal shareholders. Unocal had tried to exclude the Pickens group from the offer, arguing that it had a right to target the offer to whatever shareholders it wished.
Without the exclusion of Pickens' group, Unocal's offer loses much of its teeth as a defensive tactic that would both provide a pricier alternative to Pickens' $54-a-share bid for a 51 percent stake in Unocal and make the company a less attractive target by increasing its debt.
Pickens said he was pleased by the Delaware ruling. "The offer is opened up to us," he said in a telephone interview from Mesa's Amarillo, Tex., headquarters. "That's the way the American free enterprise system works."
Unless Unocal changes the terms of its offer, Pickens will now be able to sell part of his group's 13.6 percent holding in Unocal back to the company for $72 a share -- nearly twice what he paid for it.
Under terms of the offer, Unocal would buy back 29 percent of each shareholder's stock, thus leaving Pickens with the same overall percentage stake in the company, 13.6 percent. Pickens would receive nearly $500 million for his stock -- a profit of about $178 million -- and, if he wished, could reinvest the proceeds in Unocal. "We can take that money and do exactly what we want," he said.
Pickens in recent years has made highly profitable, though unsuccessful, takeover raids on several other major oil companies. He has come up against his stiffest opposition yet at Unocal.