The third offer proved the charm for Unocal Corp., which finally obtained an agreement to acquire the remaining 35% interest in Pure Resources Inc. that it does not already own. Pure Resources had twice rejected an exchange share offer from the El Segundo, CA-based producer, but was finally persuaded by an offer that gave its shareholders a 35% premium and Unocal sole control.

With the transaction — which Pure Resources management stalled for nearly five weeks — Unocal will increase its natural gas reserves in West Texas, and also obtain sole control of more than $200 million of Pure Resources’ operating cash flow.

The transaction, to exchange each Pure Resources share not owned by Unocal for 0.74 of a Unocal share, is a 35% premium to Pure Resources’ Aug. 20 closing price of $17.52. Unocal’s original offer of 0.6527, which was announced after market close on Aug. 20, was a 27% premium. Unocal’s second bid was 0.7 for each share, but Pure Resources declined that offer as well. The final offer, Unocal said, was the “highest and best offer” that it intended to make. Since its initial bid, Pure Resources stock price has risen; it was selling for about $21 on Wednesday when the deal was announced.

Under the agreement, Pure Resources’ senior management tendered all of its outstanding shares, and relinquished, without additional payments, the put rights covering approximately 2.797 million outstanding shares, with options to acquire another 4.1 million shares. The 2.797 million shares represent approximately 5.5% of Pure Resources’ outstanding stock. Unocal also agreed that it would not waive the condition to the offer that a sufficient number of shares be tendered that would result in parent corporation Union Oil owning at least 90% of Pure Resources’ outstanding common stock.

Unocal will file amended offering documents with the Securities and Exchange Commission soon, and said the exchange offer would remain open for 10 business days from the date of the amendment, and would remain subject to conditions in its amended offer made Oct. 3.

Pure Resources, headquartered in Midland, TX, develops and produces oil and natural gas in the Permian Basin, the San Juan Basin, along the Gulf Coast and the Gulf of Mexico. The company also owns an undivided interest under approximately 6 million gross fee mineral acres throughout the southern Gulf Coast region of the United States. It was formed in May 2000 through the combination of Titan Exploration Inc. and the Permian Basin Business Unit of Unocal.

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