Word: texaco
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Testifying by videotape, Getty told jurors that a few days after sitting down with Liedtke, he had learned that the J. Paul Getty Museum had agreed to sell it's 11.8% stake in Getty Oil to Texaco. Getty, who controlled 40.2% of his family's oil company, described being approached by Texaco, which wanted to buy his shares. He explained why he agreed to make a deal: he feared that by keeping his shares while others sold out, he would be just a minority stockholder with no real power...
...Texaco Attorney Richard Miller tried to show that Getty's agreement with Houston-based Pennzoil was never consummated. Getty Board Member Henry Wendt testified that the offer of $110 a share by Pennzoil's Liedtke was "hostile" and said the board had rejected it on Jan. 2. Miller argued that Getty's board had felt trapped by Pennzoil's offer and sought out a so-called white knight to be a friendlier merger partner...
...buttressed his case with a memorandum of agreement signed on Jan. 2 by Liedtke, Getty and Harold Williams, who represented the J. Paul Getty Museum. The document called for Getty to be acquired by a partnership of Pennzoil and a trust composed of the Getty heirs. Jamail contended that Texaco had unethically pressured key Getty shareholders to break the pact with Liedtke and opt for a higher offer...
Reverberations from the Houston decision echoed down Wall Street. The day the verdict was announced, Texaco stock fell $3, to close at $36.25, while Pennzoil shot up $7.62, to $57.50. Some irate legal experts felt that the compensation awarded to Pennzoil was disproportionate to the injury. Said Martin Klein, chairman of the American Bar Association's bankruptcy-litigation subcommittee: "Pennzoil is in a better position than it would have been if the merger had gone through...
Pennzoil will not get rich right away. On Dec. 5, Judge Solomon Casseb, who presided over the trial, will review the jury's decision. He could uphold, overturn or reduce the award. Texaco has vowed to fight his decision if it does not get a favorable judgment, and the case could eventually go to the Supreme Court. Whatever the outcome, last week's ruling is likely to make companies and corporate raiders more cautious about the tactics used in megabuck merger negotiations. --By Gordon M. Henry. Reported by Dean Brelis/New York and Gary Taylor/Houston