Newspaper article THE JOURNAL RECORD

Icahn Concedes Losing Battle for Texaco Board

Newspaper article THE JOURNAL RECORD

Icahn Concedes Losing Battle for Texaco Board

Article excerpt

NEW YORK - Carl C. Icahn conceded he lost the battle for five seats on Texaco Inc.'s board after a New York investment firm revealed Monday that it voted its key stake in favor of the oil giant's management.

Icahn had said he considered the 12 million votes cast by Kohlberg, Kravis Roberts & Co. to be the key block in the critical proxy contest at the Texaco stockholder meeting Friday.

``As I stated after the annual meeting, I believed that the vote was very close and that KKR (Kohlberg, Kravis Roberts) would be swing vote,'' Icahn said in a statement. ``I did what I believed should be done in waging this proxy contest and fought as hard as I could.''

Several large institutional investors had said previously that they, too, voted in favor of management.

Icahn, whose 14.9 percent stake makes him Texaco's largest shareholder, sought the board seats as a lever to pressure Texaco management into letting shareholders vote on his proposal to buy the company for $60 a share, a bid that values the company at $14.6 billion.

Icahn had no comment on whether he would continue to puruse his takeover bid for Texaco or sell out. Analysts estimated he could make a profit of nearly half a billion dollars by selling his stake.

A Texaco spokesman would say only that the company was ``gratified that Kohlberg Kravis has voted its proxy in favor of management.''

The actual outcome of the balloting is not expected to be known for several weeks, because it will take that long to sort out and count the votes representing 243 million shares.

Analysts said Texaco managers probably knew they had Kohlberg Kravis's support after the company's annual meeting Friday when they predicted victory in the proxy contest.

``It's pretty obvious that Texaco management knew which way (Kohlberg) voted,'' said Bruce Lazier, an analyst at Prescott, Ball & Turben Inc. ``They wouldn't have had a press confererce proclaiming victory if they weren't pretty sure they won.''

In composite trading on the New York Stock Exchange, Texaco fell 1 1/8 a share to close at 46 7/8, following Friday's drop of 1 1/2 a share. It was the most actively traded issue, with more than 2.6 million shares changing hands.

Despite the outcome, Icahn said: ``The closeness of the race was indeed gratifying. I am, of course, sorry that I did not win, but so be it.''

Neil Call, a spokesman for Icahn, said Icahn was evaluating his options, including ``whether to hold the shares, sell, go for a hostile offer or look for a partner. …

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