Pennzoil

"“Wouldn’t it be cheaper for Texaco to just buy Pennzoil?” The market value of Pennzoil had only increased a few billion dollars since the judgment was issued, so paying a premium for Pennzoil would be cheaper than paying the $ 12 billion judgment. As the junior person on the team, I had no idea whose brainstorm that was. But I thought it was ingenious. Amid all our work, Texaco delivered a bid for Pennzoil that was a big premium to the prevailing stock price at the time."

"The meeting went on until 1:35 A.M., and Tisch, whose reputation for integrity and Wall Street savvy had brought him to Getty’s atten- tion, began to wonder about Getty’s focus. Getty had met Tisch just a few weeks earlier and had already begun to rely on his commonsense approach to the situation, but it quickly became clear that Tisch wasn’t there to further Getty’s agenda. As always, Tisch was there to do the right thing for all the shareholders. The board reconvened at 1:45 a.m. Tisch told Getty he should de- mand that Pennzoil increase its bid to $120 a share. Pennzoil had to offer enough money to eliminate any lingering doubts about whether the price was a fair one. If the board approved a low bid, directors could face litigation by angry shareholders. On the other hand, Tisch saw no point to Sid Petersen’s proposal that the Getty company should buy back its own shares. If we’re voting for a self-tender just because we’re upset at Pennzoil and Mr. Getty, that’s not a valid reason,” Tisch told the board. Ad- dressing Getty, he said, “You may have suits if you do this by threat, and you should discuss this with your attorneys.” The threat was that, once the standstill was over, Getty and Williams would vote out op- posing directors, but the board couldn’t take the legal risk of accept- ing a deal that Goldman Sachs hadn’t deemed fair. “If someone challenges this transaction,” Tisch told him, “we will say you forced us, Mr. Getty.” “I have done nothing unethical!” Getty said. This is not ethics. You have not given the board the opportunity to seek a fair price, Tisch said. “A small ten-dollar sweetener. Some- thing to satisfy this board.”"