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Some Unocal Holders Are Quietly Waiting : Reluctant to Discuss Views on Pickens' Bid

April 11, 1985|AL DELUGACH and PAUL RICHTER | Times Staff Writers

Some investment managers for major institutional holders of Unocal stock said Wednesday that they have not yet decided whether to tender the shares to the T. Boone Pickens investor group in its bid to take control of the Los Angeles-based oil company. But even more aren't saying anything publicly.

"We haven't taken a position," said W. K. Hauser, a partner in Wentworth Hauser Violich, independent investment managers, San Francisco. "We probably won't make a decision for another week or so. We will let the dust settle.

"We have to wait and see what moves Unocal makes in the next week. The ball is in their court," Hauser said. The Pickens group has offered $54 each for just over 50% of Unocal's shares. He said his firm manages "several million dollars worth" of Unocal stock for clients, whom he declined to name.

Hauser commented that, despite Pickens' past moves, "in this case it appears (Pickens) wants to run the company--which may have been his ultimate desire all along. The other things may have been trials on the learning curve." Pickens has, in the past three years, made unsuccessful efforts to acquire four other oil companies. Each time, he has emerged with a profit, however.

Jack Tilton, investment manager for American National Bank & Trust, Chicago, said he, too, is in a wait-and-see mood.

"We have not made any decisions," he said. "We're watching the situation."

However, he noted, the bank's investment managers are perhaps in a different situation from other investment managers in that the Unocal shares over which it has discretionary power are all held in an index fund whose objective is "to track the Standard & Poor's 500," an index of major stocks.

He added that the bank is concerned with holding Unocal shares in proportion to its standing in that index, rather than to make a judgment on whether it (or any other stock) is above or below its value.

Meanwhile, other investment managers for institutions with large amounts of Unocal stock in their portfolios showed reluctance to discuss their views on the Unocal-Pickens fight.

Although Wall Street arbitrageurs generally are unwilling to disclose their stock purchases, some did offer some general observations on the Unocal situation Wednesday. Their comments showed that Pickens clearly is being taken seriously.

"You've got very credible, substantial people involved in the offer," said Alan B. Slifka of Halcyon Investments, New York. "Pickens and Drexel (Drexel Burnham Lambert, the investment firm handling Pickens' takeover financing) are people to be taken seriously."

Often "risk arbitrageurs" play a major role in takeover battles, buying a target firm's stock in anticipation of selling out to a suitor such as Pickens.

But some arbitrageurs may have stayed out of Unocal's stock, having felt burned by Pickens earlier this year, when the oil executive backed out of a takeover battle for Phillips Petroleum.

As part of a complicated peace settlement, Pickens walked away with an $89-million profit from the sale of his Phillips stake. Critics described the transaction as "greenmail," saying Pickens got a better deal than other stockholders in exchange for backing away from the takeover. Pickens denied the greenmail charge.

Phillips' stock price fell dramatically after the deal was announced.

Guy Wyser-Pratte, an arbitrageur with Prudential-Bache Securities, who said he has not bought any Unocal stock, told The Times: "Pickens' credibility was severely, perhaps fatally, impaired by virtue of having accepted greenmail in the Phillips transaction."

Wyser-Pratte also said there are risks in Unocal's potential anti-takeover moves, "not the least of which is 85 million authorized but unissued shares." He added:

"I would not want to be around if (Unocal) issues those."

TOP INSTITUTIONAL HOLDERS OF UNOCAL As of Dec. 31, 1984

Shares Held Bankers Trust 2,154,972 College Retirement Equities 2,081,900 Donaldson, Lufkin & Jenrette 1,697,380 Batterymarch Financial Mgmt. 1,554,440 State Street Research & Mgmt. 1,493,000 Aetna Life & Casualty 1,430,100 Wells Fargo Bank 1,403,551 Loomis,. Sayles & Co. 1,317,828 General Electric Pension Trust 1,305,000 California Public Employees Retirement System 1,054,200 Prudential Insurance 970,200 U.S. Steel & Carnegie Pensions 916,000 Manufacturers Hanover Investment 915,130 Rollert & Sullivan 867,900 Ohio State Teachers Retirement 832,000

Source: Computer Directions Advisors

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