Newspaper article THE JOURNAL RECORD

Chevron Team Planned for Takeover Attempt

Newspaper article THE JOURNAL RECORD

Chevron Team Planned for Takeover Attempt

Article excerpt

WhenPennzoil Chairman Hugh Liedtke called Chevron Chairman Ken Derr on Pearl Harbor Day to tell him that Pennzoil had bought an 8.8 percent stake in Chevron, it came as no great surprise.

In an office adjacent to Derr's, a Chevron team was already plotting a counterattack against an unknown foe that had been accumulating the company's stock - and they figured it might be Pennzoil.

This and other behind-the-scenes tidbits emerged from a candid, informal talk that Derr held with San Francisco-based Chevron's employees last week. More than 1,000 attended the Dec. 11 session, and a videotaped version is being shown to thousands more throughout the company.

Chevron did not invite the press to the session, and it declined to let a Chronicle reporter view the tape. An account of what transpired has been pieced together from statements by employees.

``He left us with the impression we were well-prepared,'' one employee said. ``It was a `considered' rather than `panic' mode.''

Derr said that Chevron noticed unusual trading in its stock during September - heavy volume and swiftly rising prices - and promptly formed a stock-watch team to monitor the action and determine what was behind it. Derr didn't name members of the team, but employees in the know speculated that one was Martin Klitten, the company's chief financial officer.

The stock continued to surge on near-record volume, stimulated by a Business Week magazine article about the company. When Chevron made a strong rebound after the October 13 stock-market mini-crash, the stock-watch team became convinced that the shares were under systematic accumulation.

In November, Derr told the employees, Chevron retained a professional Wall Street stock-watch firm - in effect, financial detectives. Derr didn't name the firm, but sources said it was Georgeson & Co., which is normally charged with soliciting Chevron proxies just before annual meetings. …

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