An investor group led by Texas oilman T. Boone Pickens on Wednesday reportedly hiked its stake in Los Angeles-based Unocal Corp. to 13.5% from 9.8%, participating in one of the largest single transactions in stock exchange history.
David Batchelder, financial vice president for Pickens' Mesa Petroleum Co. of Amarillo, told the Associated Press that the Mesa Partners II investor group bought 6.7 million shares of Unocal stock for $48 per share, or $321.6 million. Mesa Partners II now owns 23.7 million shares of Unocal, or 13.5%, Batchelder said. He did not return a Times reporter's phone calls Wednesday.
A spokesman for Unocal, parent of Union Oil Co. of California, declined comment on the purchase.
The 6.7-million-share purchase was part of a 7-million-share block bought on the Midwest Stock Exchange by Jefferies & Co., a Los Angeles-based brokerage firm. The total purchase price was $336 million. A spokesman for Jefferies & Co. refused to say for whom it bought the Unocal stock.
2nd Most Expensive Block
The 7-million-share Unocal block was the second most expensive single transaction ever conducted on a U.S. stock exchange. A 10-million-share block of Superior Oil Co. stock was bought for $42.375 a share on June 21, 1984, for a total of $423.75 million.
The Unocal transaction tied for second place in terms of the number of shares with past block trades of American Express Co. and Ramada Inns Inc. stock.
Unocal was the most actively traded issue Wednesday on the New York Stock Exchange, with a total of 8.54 million shares changing hands on all exchanges. But the Big Board price of Unocal stock rose only 87.5 cents to close at $47.625.
Wednesday's tally was the highest daily trading volume in Unocal's history, a company spokesman said. The prior record of 4.044 million shares was set on Feb. 7.
Mesa Partners previously owned about 17 million shares, or 9.8% of Unocal's 174 million shares outstanding, on which it spent about $784 million. The group has said it may increase its total investment to $1.2 billion, which would raise Mesa's stake to more than 15%.
Mesa has repeatedly said it has "no present intention" of launching a takeover bid for Unocal, but Unocal has characterized the purchases as a hostile takeover attempt. Under Unocal's newly revised corporate bylaws, Monday is the last day that new business or nominees for director can be proposed for Unocal's next annual meeting on April 29. Shareholders are allowed to vote only those Unocal shares that they owned on March 14.
The active trading in Unocal stock, in addition to the 7-million-share block, indicates that "a lot of people jumped on the old bandwagon" Wednesday, hoping for a bidding war, said M. Craig Schwerdt, an oil industry analyst with Los Angeles-based Morgan, Olmstead, Kennedy & Gardner.
The small price move on Wednesday wasn't surprising, said analyst Herbert Hart of San Francisco-based S. G. Warburg, Rowe & Pitman, Akroyd Inc.
Hart said he believes that the price of Unocal's stock will rise to between $55 and $65 with a bidding war but that "it's pretty hard to get much above the middle 50s" without a takeover attempt. Investors aren't yet willing to push the stock much higher in price, he said.
Unocal's stock traded as low as $34 per share in January, before the Pickens group first revealed its holdings. Since that announcement on Feb. 14, Unocal's stock has traded at or near $48 per share.