Tracinda drops tender offer for Tesoro in response to shareholder rights plan

By Lisa Kerner

Charlotte, N.C., Nov. 27 - Tracinda Corp. withdrew its $64-per-share cash tender offer for up to 21,875,000 shares, or some 16%, of the outstanding shares of Tesoro Corp.

Tesoro's board of directors had remained neutral on the tender offer that began Nov. 7 and was slated to end on Dec. 6.

Despite Tesoro's execution of its strategic plan, Tracinda said in a news release it is "unwilling to become a substantial investor in a company in which the shareholders do not come first."

Tracinda said the recently adopted shareholder rights plan restricts shareholders' ability "to vote, sell or acquire Tesoro shares freely without fear of triggering the draconian provisions of the rights plan."

In response, Tesoro said, "The rights plan trigger of 20% is above the ownership level contemplated by Tracinda's tender offer, and in no way would it have interfered with the Tracinda tender offer or the ability of Tesoro's stockholders to freely vote or sell their shares."

It was previously reported that 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.

Tesoro noted on Tuesday that the rights plan adopted by its board contained a number of "stockholder friendly" provisions to comply with Risk Metric Group (ISS) policies on rights plans. In addition to the 20% trigger, the plan includes a three-year fixed term as well as a provision requiring a committee of independent directors to assess annually whether the rights plan remains in the best interests of Tesoro's stockholders.

Tesoro is a San Antonio-based petroleum refiner.

Tracinda is a Beverley Hills, Calif., private investment corporation owned by Kirk Kerkorian.

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