Newspaper article THE JOURNAL RECORD

Pickens, Investors Drop Diamond Shamrock Bid / Hours after Rejection

Newspaper article THE JOURNAL RECORD

Pickens, Investors Drop Diamond Shamrock Bid / Hours after Rejection

Article excerpt

DALLAS - An investment group led by Texas oilman T. Boone Pickens Jr. dropped its $2 billion bid to acquire Diamond Shamrock Corp. on Thursday only hours after Diamond Shamrock rejected the offer as inadequate.

Directors of Diamond Shamrock, a Dallas-based energy concern, "unanimously agreed that the long-term interests of our shareholders would be better served by an independent Diamond Shamrock pursuing its current strategies," the company said Thursday in a letter sent to its stockholders.

The board also questioned the "uncertain value" of the Mesa Limited Partnership units that were to be exchanged for Diamond Shamrock's common stock, and on Mesa's ability to continue making the proposed cash distributions, or dividends, to holders of the units.

Pickens, however, issued a statement charging that Diamond Shamrock's executives rejected the offer merely to protect their jobs.

"This management has a history of making bad decisions for shareholders, and today's actions continue the trend," Pickens said. "In the two years since the board rejected Occidental Petroleum's merger proposal valued at $23 per Diamond share, Diamond has reported net losses of nearly $700 million.

"During that same period, they have cut the common stock dividend from $1.76 to $.40 per share and stockholders' equity has declined by more than $1 billion.

"Yet the company continues to provide management with lavish hunting camps and ranches, a skybox at Texas Stadium and five jet airplanes including a 727 with a bedroom."

"They have adopted the standard approach of entrenched management - hire investment bankers and lawyers, reject and sue," said Pickens, Mesa's general partner. "This strategy is expensive and wasteful of shareholder money, and is designed to prevent shareholders from making their own decisions.

"The merits of Mesa's offer should have been evaluated by the shareholders of Diamond Shamrock, not its entrenched management," he said. "We are disappointed, just like the other shareholders of Diamond Shamrock.

On Dec. 3, Pickens' group, which also included Alabama construction executive John M. …

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