Mesa Petroleum has second thoughts about its bid to take control of GAO
Mesa Petroleum has decided to reassess its bid for General American Oil.
In a move that surprised some analysts, Mesa Petroleum Company said Dec. 23 it was ''reviewing'' its offer to buy 13 million shares of General American Oil for $40 a share in light of General American's offer to buy 8 million of its own shares for $50 a share. Mesa said it is ''deferring any action as to whether to terminate or amend its offer.''
T. Boone Pickens, Mesa's chairman, called General American's strategy a ''scorched earth'' policy, using up its cash and borrowing to buy its own stock.
Separately, General American issued a statement saying the Mesa offer was ''inadequate'' from a financial point of view. Also, Curtis Meadows Jr., president of the Meadows Foundation, which owns 26 percent of the stock, said he intended to recommend to the trustees of the foundation that they not tender their shares.
Ann Mobley, an analyst with E.F. Hutton in Houston, said it appeared the GAO bid delays the effectiveness of the Mesa bid, allowing GAO a chance to find a $ 50 a share bid. She felt it also put a floor on any third-party bid, and did not rule out Mesa making a bid of $50 a share for the first part of the stock and less for the rest of the company.