Icahn Makes 3rd Offer for Phillips Worth $8.6 Billion

Financier Carl Icahn threw another punch Tuesday in the high-stakes fight for Phillips Petroleum Co., saying he will offer $60 a share for half the company and debt securities for the other half in a deal worth $8.6 billion.

The latest proposal by Icahn--his third in a little over a week--set the stage for a protracted fight for stockholder votes at a meeting scheduled for Feb. 22, when the Bartlesville, Okla., firm will seek approval of a recapitalization plan.

The plan was designed last December to thwart a takeover attempt by Texas oilman T. Boone Pickens but has recently become the focus of an effort by Wall Street broker Icahn to take control of Phillips, the nation’s 10th-largest oil company.

Separately, Phillips announced that President C. J. (Pete) Silas has been named to succeed Chairman William Douce, 65, when Douce retires following the annual stockholders meeting April 30. Silas, 52, began his career with the company in 1953 as a chemical engineer and was a major architect of the company’s international operations.

‘Chess Player’

Glenn Cox, 55, the company’s chief financial officer, was named to succeed Silas as president.

Industry analysts suggested Tuesday that Icahn appears to be more interested in scuttling the recapitalization plan than in actually owning Phillips.

“Icahn is really a chess player, and he’s playing this thing like a grand master,” said one Wall Street analyst, who asked not to be identified. “He’s trying to do whatever he can to prevent the management from prevailing at the Feb. 22 meeting.”

Analysts say that, if stockholders defeat the plan, Phillips will be more open to a “friendly” takeover bid from another firm, allowing Icahn to sell the 7.5 million Phillips shares he already owns at a profit.

Icahn said he will commence a tender offer for $60 a share in cash for 70 million shares, which--when combined with the stock he already owns--would give him slightly more than 50% of the company. He then intends to exchange debt securities at the rate of $50 a share for the remaining half of the company. The two-tier price appears designed to provide an incentive for stockholders to tender their shares early.

The offer is conditioned on Icahn being able to overturn a “poison pill” defense tactic approved by Phillips directors last week that provides for stockholders to receive a sort of IOU for $62 a share, payable in a year, should any individual accumulate more than 30% of the company’s stock.

Icahn said he intends to sidestep that provision by getting owners of more than half the company’s stock to elect a new board of directors, who would redeem the IOUs at the agreed-upon price of 25 cents per share.

In a statement, Phillips said the latest Icahn proposal is “not substantially different from previous ones that were rejected.” Those earlier bids were a $55-a-share offer, half in cash and half in debt, for all of the stock, followed by a $57-a-share offer for 25% of the stock.

Investors greeted the latest Icahn proposal with little enthusiasm, indicating that he may have trouble winning support for his effort to replace Phillips directors. Phillips stock finished the day unchanged on the New York Stock Exchange, closing at $50 a share as the third-most active issue.

Robert Kirby, senior vice president of Capital Group, a Los Angeles-based money management firm holding several million shares of Phillips stock, said the market reaction indicates that Icahn’s bid is not being taken seriously.

“Pretty clearly, there is nobody out there who thinks Phillips is a big deal at $60,” Kirby said. “I don’t know what the right number is, but it’s below $60.”

Kirby said he is still leaning toward supporting the recapitalization plan, which he estimates will be worth a little over $50 a share to stockholders.