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Carl Icahn Recounts the Pennzoil Texaco/Getty Oil Feud
By Dian L. Chu, EconForecast
The Getty Oil takeover battle between Texaco and Pennzoil was probably one of the ugliest in Wall Street's history. In 1984, Texaco swooped in at the last minute with a winning bid before Pennzoil was able to finalize an already agreed-upon deal with Getty Oil.
A furious Pennzoil filed suit and started a bitter legal feud that lasted for the following four years, which pushed Texaco into bankruptcy, until a settlement of $3 billion, brokered by Carl Icahn, was reached. At the time, Cal Icahn, a noted corporate raider and financier, accumulated over 13% of Texaco's stock in a failed attempt to take control of the board.
However, the settlement, in which Icahn acted as a catalyst, removed the dark clouds hanging over Texaco and Pennzoil. As a result, both companies were able to move on and refocus on business. The resulting gains in stock prices also got Icahn some sizable financial windfall.
In the end, the biggest winners of all were the law firms, as Texas lawyer Joseph Jamail (whom Icahn mentioned in the video below) reportedly got $600 million for leading Pennzoil's attack against Texaco.
Here is a rare video of Carl Icahn recounting the event at Caroline's Comedy Club in Manhattan, New York.
Dian L. Chu, Economic Forecasts & Opinions, Dec. 19, 2010
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So was I (for Texaco, in Houston at the time). He's got most of it straight, and omits a key point: Gordon Getty DID NOT HAVE THE AUTHORITY TO SELL GETTY OIL. He was a MINORITY stockholder; the Sarah Getty Trust was the majority stockholder. Gordon made a piss-poor deal to sell Getty Oil, the Board of the Trust rejected it, and Texaco made a white-knight offer (as much as a bunch of thieving buccaneers can be white knights) to buy Getty that was more than Pennzoil could match. A HANDSHAKE DEAL NOT ON PAPER (that much Icahn remembers) cost Texaco control of their company, along with money that might have found / produced / refined oil; such is the cost of stupidity (Texaco's slick NY lawyers offended the Texas jury, Icahn remembered that correctly as well).
What this really shows is how much the world of stand-up comedy lost when Icahn became an investor! He's really pretty good!
I was working for an oil company at the time. I remember this. I thought the Gulf acquisition by Chevron was more funny though.