Pennzoil Directors Reject $4.2 Billion Takeover Offer

Pennzoil Co. announced Tuesday its board of directors rejected a $4.2 billion hostile takeover offer by Union Pacific Resources Group Inc.

The board unanimously agreed last week’s offer was inadequate and not in the best interests of Pennzoil shareholders, said Pennzoil Chairman James Pate.

“We want to remain independent and pursue our strategic plan which we think … promises to deliver more value to shareholders than any kind of combination with UPR or anybody else could provide,” Pate said in a statement.

In its bid for Pennzoil, Union Pacific Resources offered to pay $84 per share in cash for 50.1 percent of Pennzoil’s stock. The company also would assume $2.2 billion of Pennzoil debt.

Pate said the board was recommending that shareholders also turn down the proposal.

Union Pacific Resources responded by urging shareholders to tender their stock to the company.

“It is clear that Pennzoil is trying to hide from its shareholders behind a classic ‘just say no’ defense,” Union Pacific Resources said in a statement. “The business rationale of this combination is so powerful, and the premium we are offering shareholders so substantial, that we believe the merger of UPR and Pennzoil is inevitable.”