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Natural gas

Mesa Inc. Faces Pressure to Sell or Merge as Shareholder Lawsuit Looms

Strategic Insights

— 1 min read

Robert Strougo, a Mesa Inc. stockholder, has filed a suit in Texas state court against the company and eight directors to prevent them from taking action to prevent the sale of the company, adding to the pressure on Chairman T. Boone Pickens Jr. to sell or merge the company. Large stockholders Dennis Washington and Marvin Davis also favor a sale or merger, citing Mesa's financial problems as a result of low natural gas prices. In a special board meeting, Pickens asked the board to consider a possible merger, stressing that he will not be rushed into selling the company at the bottom of the market.

Key Takeaways:

  • A class action suit has been filed against Mesa Inc. and eight directors, seeking an injunction against any action that thwarts shareholder value maximization, such as the sale of the company.
  • The suit alleges that the eight directors are using their position to thwart legitimate attempts to maximize shareholder value.
  • Mesa shares fell 3/8 to 4 5/8 in Thursday trading on volume of 877,300 shares.
  • Chairman T. Boone Pickens Jr. has been criticized for not increasing the share price of the company and has stressed that he will not be rushed into selling the company at the bottom of the market.
  • Dennis Washington and Marvin Davis, who hold a 9.4% stake in the company, are pushing for a sale, merger, or other business combination.
  • The two investors are advised by David H. Batchelder, Pickens' former right-hand man, who stands to profit if a deal is completed by the end of the year.
  • Pickens has warned employees that the group will accuse Mesa of mismanagement and has expressed disappointment with Batchelder's actions.

Statistics:

  • Mesa's shares fell 3/8 to 4 5/8 in Thursday trading.
  • The volume of shares traded was 877,300.
  • Mesa's debt is $1.2 billion.
  • The highest bid for the Hugoton field was $750 million, while the company's target price was $1.1 billion.

Sources:

  • "Mesa holders sue to block sale" by The Dallas Morning News (date not specified)
  • "SEC Filing: Dennis Washington and Marvin Davis" (June 29)
  • Internal memo obtained by The Oil Daily (date not specified)
  • A report by The Oil Daily (date not specified)
  • A statement by Mesa Spokesman Jay Rosser (date not specified)

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