Unocal said Sunday that its board of directors unanimously rejected as "grossly inadequate" a tender offer by Texas oilman T. Boone Pickens and his investor group.
The decision came during a special board meeting Saturday, Unocal said in a terse, two-paragraph statement. Unocal received the offer, for 64 million shares at $54 each, from Mesa Partners II and its Mesa Eastern subsidiary last Monday.
Unocal said it "will promptly make appropriate recommendations to its shareholders."
A company spokesman had no further comment on the meeting. Unocal Chairman Fred L. Hartley was unavailable for comment.
"If our $54 is grossly inadequate, I wonder what they called the $38 the stock sold at before (Mesa began buying shares)--that must have been terrible, grossly terrible," said David Batchelder, financial vice president of Mesa Petroleum, the Amarillo, Tex., oil company headed by Pickens that is the major partner in Mesa Partners II. (Unocal's stock price closed at $48 a share Feb. 14, the day Mesa first announced that it owned substantial Unocal holdings. In mid-January, before the rumors about Pickens' interest in Unocal began, the stock was trading as low as $34.)
Mesa, meanwhile, filed two lawsuits against Unocal late Friday and sent out proxy materials over the weekend related to its efforts to postpone Mesa's upcoming annual meeting. On Sunday, Mesa said that, in half the time it thought would be required, it has raised the $3.9 billion it needs to acquire the Unocal stock and pay the banking and commitment fees.
Of the $3.9 billion in financing commitments accepted by Mesa Partners II, $3 billion was raised by Drexel Burnham Lambert, the New York investment banking firm, Batchelder said. In exchange for the $3 billion, investors will receive $2.4 billion in Mesa Eastern securities and $600 million of securities to be issued by Mesa Petroleum.
The additional $900 million has been committed by commercial banks. Citing the current furor over banks' participation in takeover fights, Batchelder declined to name the participating banks.
$45 Million in Fees
Mesa Partners also will pay $45 million in fund-raising and commitment fees. Drexel will receive $15 million, $7.5 million goes to the banks and $22.5 million goes to the investors who have agreed to put up the $3 billion.
The lawsuits challenge recent amendments to Unocal's bylaws and allege that Unocal is illegally using its shareholders' proxies to vote against the postponement that Mesa is seeking.
In a lawsuit filed late Friday in Delaware Chancery Court against Unocal, Hartley and certain other Unocal directors, Mesa challenges as "unenforceable" and seeks to remove a recent change in Unocal's bylaws. With the change, anyone nominating a candidate for Unocal director must give the firm at least 30 days notice and disclose any Unocal stock holdings, a five-year history of businesses and occupations, any criminal convictions, companies in which the nominee has a 10% or larger stake and all other information normally required by federal proxy rules.
Previously, only 24 hours' notice had to be given and no extra disclosure was required.
In a second suit, this one filed late Friday in U.S. District Court in Los Angeles, Mesa accuses Unocal of misrepresenting the purpose and effects of the bylaw amendment and of misusing its proxy authority.
Unocal shareholders who can't be present for the Unocal annual meeting have voted their proxies and returned them to Unocal. Mesa charges that those proxies were already voted before Mesa made its bid for Unocal and sought to postpone the annual meeting. But Unocal, Mesa alleges, is using its discretionary authority illegally--voting the proxies against Mesa's attempt to postpone the annual meeting.
A Unocal spokesman said no one at Unocal was available for comment on the suits.
Mesa's two lawsuits, coming on the heels of several suits filed by Unocal, intensify the legal fight being waged by the two companies. Last week, Unocal and the trustee for its retirement plan accused Mesa in separate suits of violating federal securities laws.
Unocal also has filed an antitrust suit against Mesa and sued its own longtime banker, Security Pacific, over loans made to the Mesa group. After Security Pacific pulled out of the credit agreement with Mesa, Mesa sued Unocal for interfering with its banking relationships.