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Not for lack of trying, though. When a July 1983 report by Goldman, Sachs favored a $500 million-a-year stock-repurchase plan as a way of boosting the company's market price, the Petersen-dominated board of directors rejected the idea because it would have increased the Getty family's stake to about 53%. Indeed, the board took just the opposite tack, deciding in early October to issue new shares that would dilute Getty's influence.
A truce seemed at hand later in October when the warring parties signed a one-year agreement that prohibited both sides from altering the status quo. But that accord lasted about as long as a cease-fire in Lebanon. During a Getty Oil board meeting in November, the directors asked Gordon to leave the room. While he was out, they decided to support a lawsuit challenging his position as sole head of the Sarah C. Getty Trust.
The suit, brought on behalf of Gordon's improbably named 15-year-old nephew Tara Gabriel Galaxy Gramaphone Getty, had been started by the teen-ager's father, J. Paul Getty Jr., 51, Gordon's older brother. The two siblings have seldom got along. Gordon's lawyers charged that oil company officials coerced J. Paul Jr.
into bringing the lawsuit.
While watching this melodrama from his Houston headquarters, Pennzoil's Liedtke sensed that Gordon Getty might welcome a partner. Liedtke made his first move two weeks ago, with a $1.6 billion offer of $100 a share for 20% of the oil company. Then while the rest of the business world watched bowl games the day after New Year's, Getty and Liedtke huddled over plans in Getty's apartment on Fifth Avenue in Manhattan. Liedtke, 61, a lawyer and Harvard M.B.A., outlined a strategy that would make Getty Oil a private firm owned 57% by family heirs and 43% by Pennzoil.
That Pennzoil-Getty accord, though, drew the attention of Texaco, based in White Plains, N.Y., which has also been looking for new supplies of crude oil. Texaco's total petroleum pool shrank 25% between 1979 and 1982, to about 1.9 billion bbl. With the addition of Getty's supply, Texaco's reserves would double.
Texaco Chairman John K. McKinley decided to top Liedtke's bid. First Boston, a New York City investment banking firm, advised McKinley on the price to propose. Texaco offered $125 a share. On Friday, Getty's board approved the deal in a hastily scheduled conference telephone call.
When Liedtke heard of the offer, he shot off a telex to the Getty board threatening to sue the company for breaking the earlier agreement and promising to exercise a stock-purchase clause entitling Pennzoil to purchase 8 million Getty shares at $110 each. That would net Pennzoil a profit of some $120 million at the price Texaco is offering to pay.
The final word has probably not been heard from Liedtke, and the Justice Department could raise antitrust objections to the merger of the third and 14th largest U.S. oil companies. But no matter what happens now, Gordon Getty has achieved his goal of driving up the price of the family's stock. His company holdings, valued at $500 million a year ago, are now worth about $1.3 billion. — By Stephen Koepp.
Reported by Russell Leavitt/Los Angeles and Gary Taylor/Houston