Newspaper article THE JOURNAL RECORD

Harken Proposes Cash Merger Worth $190 Million with Tesoro

Newspaper article THE JOURNAL RECORD

Harken Proposes Cash Merger Worth $190 Million with Tesoro

Article excerpt

DALLAS - Harken Energy Corp. announced Wednesday that it has submitted a proposal to Tesoro Petroleum Corp. of San Antonio for a cash merger worth about $190 million.

Tesoro's common shareholders would receive a cash payment of $11.75 per share, representing a 22.1 percent premium over Tuesday's closing price of $9.625 per share.

Harken paid $45 million in December 1988 to acquire all the oil and gas reserves of Shar-Alan Oil Co., Denver, and P&M Operating Co., including wells in northwest Oklahoma.

With 14 million Tesoro common shares and preferred stock convertible into 2.3 million common shares, or a total of about 16.3 million common shares outstanding, the estimated value of the transaction is about $190 million.

Harken stated that its proposal is fully financed and would be for all shares of common stock. Harken also said it had obtained and paid for a commitment from Bankers Trust Co. to provide the necessary financing which, together with the equity it would be contributing, would be sufficient to promptly consummate the merger.

Alan G. Quasha, chairman of Harken's board of directors, writing on behalf of the company to Dr. Robert V. West Jr., chairman of Tesoro's board of directors, emphasized that the the proposed transaction is a friendly offer.

``Our review of Tesoro's business has confirmed our believe that a combination of Tesoro's operations with our own businesses would produce sufficient synergies to allow us to pay a premium price to Tesoro stockholders for their shares.

``Our $11.75 per share proposal provides Tesoro's shareholders a premium of approximately 30 percent over the closing price of the stock just prior to Harken's July 12 announcement of its interest in the company and a premium of more than 25 percent above Tesoro's average closing price during the four week period preceding that announcement.

``We understand the obligation of your Board of Directors to consider our proposal in light of the best interests of Tesoro's shareholders. We also recognize the additional responsibility that your directors quite properly will feel toward Tesoro's employees, management and customers. …

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