Joseph E. Seagram & Sons Inc., the big Canadian distiller, revealed today it was trying to gain a controlling interest in Conoco Inc., the ninth-largest U.S. oil company.
The $2 billion Seagram bid, the latest in a recent series of Canadian attempts to take over U.S. companies, comes at a time when the Canadian parliament is making it harder for U.S. companies to own Canadian firms, especially those in the oil and gas business.
Seagram Ltd., the world's largest producer and marketer of distilled spirits and wines, last year had sales of $2.5 billion. Conoco, the ninth-biggest oil company and the 14th-largest industrial corporation in the United States, had sales of $18.3 billion last year.
Canadian Prime Minister Pierre Elliot Trudeau has put forward a program to "Canadianize" that nation's oil and gas industry and is expected to come up with proposals soon to put curbs on foreign subsidiaries. Trudeau has promised more vigorous surveillance of foreign investment.
Joseph E. Seagram & Sons is a wholly owned subsidiary of The Seagram Co. Ltd., which is based in Montreal. Seagram was rebuffed last April when it tried to take over St. Joe Minerals Corps. for $2.1 billion.
Conoco was the target of another Canadian attack last spring. Dome Petroleum Ltd., of Calgary, a company one-third the size of Conoco, bought 22 million Conoco shares in an unfriendly tender offer, then turned the shares back to Conoco in return for Conoco's Canadian oil and gas interests and $245 million cash.
Seagram has been sitting on a pile of cash since it sold its U.S. oil and gas holdings to the Sun Oil Co. last year for $2.3 billion. Even since then it has been searching for a way to invest the money.
Conoco has no more investments in Canada after swapping its 52.9 percent stake in Hudson Bay Oil and Gas Co. to Dome. But a spokesman for Seagram said Conoco is "an attractive company with strong positions in oil and coal and other fields as well."
Last week Conoco revealed that a foreign company, which it would not identify at the time, offered to purchase 15.9 million shares from Conoco at $70 a share and acquire another 9.6 million in the open market.
As an alternative, Seagram proposed to buy 28.6 million shares directly from Conoco at $70 a share -- a $2 billion transaction that would have given Seagram effective control of Conoco with more than 25 percent of the stock.
Conoco was the fifth most active stock on the New York Stock Exchange today. It closed at $62 a share, $3.25 higher than its Monday close and $7.50 higher than its final price last Thursday, just before it disclosed the "foreign" offer.
Conoco rejected both Seagram proposals and said it has approached another U.S. company that is "approximately similar in size" about a possible merger. Conoco has refused to answer any questions about its potential U.S. buyer.
After Conoco rejected Seagram's offer, the Canadian distiller told Conoco that it is filing a notification with both the Federal Trade Commission and the Department of Justice that it intends to buy enough Conoco shares on the open market to bring its holdings in the oil ginat to 25 percent or more. There are about 105 million shares of Conoco stock outstanding.
Canadian interests have made several well-publicized bids for U.S. companies recently but the U.S. firms have fought back hard. Although Conoco lost its fight against Dome -- Conoco's Canadian assets were Dome's goal from the beginning -- not only has St. Joe Minerals beat back Seagram's but the Hobart Corp. fought off Canadian Pacific Ltd., Canada's second biggest company After a month of battling, Hobart, a $400 million manufacturing company based in Troy, Ohio, found a friendly merger partner in Dart & Kraft.