Tracinda says rights plan violates a condition of its tender offer for Tesoro

By Lisa Kerner

Charlotte, N.C., Nov. 26 - Tracinda Corp. said Tesoro Corp.'s recently adopted rights plan resulted in a failure of a condition to Tracinda's tender offer for Tesoro's shares of common stock.

According to a Tracinda news release, the rights plan:

• Negatively impacts all Tesoro stockholders as a result of the change in Tesoro's capitalization;

• Significantly limits opportunities to enhance stockholder value; and

• Restricts the ability of Tesoro stockholders to freely vote or sell their shares.

Tracinda is now considering alternatives with respect to its $64-per-share cash tender offer for up to 21,875,000 shares, or 16%, of Tesoro common stock. The offer began on Nov. 7 and is expected to end at 11:59 p.m. ET on Dec. 6.

As previously reported, Tesoro's board of directors said it will remain neutral and will not make any recommendations to its shareholders regarding Tracinda's tender offer.

If the full amount of shares is purchased in the offer, Tracinda's sole shareholder Kirk Kerkorian would beneficially own 27,375,000 shares, or some 20%, of the San Antonio-based petroleum refiner.

Tesoro's stockholder rights plan is designed to reduce the likelihood that a potential acquirer would gain control of Tesoro without paying a premium for all of the company's shares. The plan features a threshold for triggering exercise of the rights plan at 20% of the outstanding shares of Tesoro common stock.

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