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All that activity has attracted the official attention of Washington. A House subcommittee headed by Democrat Timothy Wirth of Colorado will open hearings this week on the merger mania in the oil industry and its impact on the U.S. economy. Heading the list of witnesses: T. Boone Pickens.
The Texas oilman has reaped his vast payoffs through the mastery of the takeover battle, a colorful form of corporate warfare fought with dollars, stock and shareholder votes. The campaigns are as vivid as the terminology of their tactics (see box). A takeover raider typically launches his attack by buying a significant percentage of a firm's stock and offering to pay other shareholders more than the current market level for their securities. The goal is to get enough shares--typically 51%--to win control of the company and the ability to run it. Management and the raider frequently get into open warfare through expensive mailings and full-page ads in newspapers in which they disparage their opponents and appeal to stockholders. Eventually shareowners have to decide whether they want to support the current management or the raider.
Pickens has never actually acquired a major corporation. His usual style has been to frighten a firm by first investing in it and then proclaiming that he could run the corporation, which invariably dwarfs Mesa in size, better than its current officers. After an often bitter battle, Pickens' harried and outmaneuvered prey frequently sells out for a high price to a friendly rescuer. That leaves Pickens without an acquisition, but with an immense profit on his shares of the company.
Such tactics have made Pickens the scourge of the oil patch. Shareholders of Mobil (1984 sales: $54.6 billion), which has been rumored for months to be a ( Pickens target, last week approved a variety of so-called shark repellents designed to ward off corporate raiders. Among the measures was a provision requiring that an unwanted merger be approved by an 80% vote.
Some shareholders welcome Pickens because he has jacked up stock prices to dramatically higher levels. He estimates that as a result of his takeover battles, about 750,000 small investors have seen the value of their holdings grow by about $12 billion. His pursuit of Gulf, for example, pushed that company's stock from $41 a share in October 1983 to the $80 that Chevron agreed to pay for it in March 1984.