A company owned by Australian investor Robert Holmes a Court intends to acquire as much as 15 percent of USX Corp., the nation`s largest steelmaker and owner of Marathon Oil Co.
The disclosure Wednesday by USX, formerly United States Steel Corp., spurred speculation of a hostile takeover attempt by Holmes a Court, well known for such bids worldwide.
USX stock surged $2.12 a share to close at $19.50 in heavy trading on the New York Stock Exchange.
In a brief statement, USX disclosed receiving a letter announcing that Bell Resources Ltd., Holmes a Court`s investment company, intends to buy $15 million or more, ”but not more than 15 percent,” of USX`s 258 million common shares outstanding.
Holmes a Court, one of Australia`s wealthiest men, has gained attention in recent years after making repeated, and so far unsuccessful, attempts to acquire Broken Hill Proprietary Co. Ltd., Australia`s largest company.
Some analysts doubt that he would succeed in buying USX, America`s 15th largest corporation.
”I don`t think he`s going to get it,” said George Zimmerman, an analyst for Gruntal & Co., New York. ”He`ll have to have a hell of a big war chest.” At Wednesday`s closing market price, USX would cost about $5 billion to acquire.
But Charles Bradford, a steel analyst for Merrill Lynch, takes the threat seriously.
”Clearly, he can buy 15 percent of USX if he wants to,” said Bradford, who put the cost of such a stake at about $730 million, before USX stock rose even further in price.
Bradford said Holmes a Court could be attracted to USX in part because of its overfunded pension plan, which he estimated has ”close to $10 a share in it,” or about $2.5 billion. Holmes a Court could also sharply reduce debt incurred in a USX acquisition by selling some of the company`s numerous assets, Bradford said.
USX, based in Pittsburgh, declined to comment beyond its two-sentence announcement.
Holmes a Court doubled his personal wealth in the last year, to an estimated $366 million, in the process becoming one of Australia`s two richest men, according to the country`s leading business magazine.
He began in 1970 with a small textile company before bidding for media, industrial, mineral and transportation companies. He even tried unsuccessfully to acquire Rolls-Royce, the classic car maker.
Several years ago, Associated Communications Corp., a British entertainment company, brought him in as a friendly investor. Within 18 months he had taken control, and later sold, at a big profit, a subsidiary that controlled
the rights to 211 Beatle songs to singer Michael Jackson.
The soft-spoken 49-year-old lawyer is still stalking Broken Hill Proprietary after four unsuccessful takeover attempts, the latest in May. He has built a stake of about 28 percent, the largest in BHP, a steel, mining and oil concern.
In his first major investment in a U.S. company, Holmes a Court last year bought a large stake in Asarco Inc., a New York-based mining and smelting concern. He threatened to buy as much as half of the company but ended up selling his holdings at a profit after Asarco adopted a ”poison pill”
defense.
A Fortune magazine profile last year said Holmes a Court will buy ”into any kind of company he thinks is undervalued.”
Under Chairman David Roderick, USX has diversified, buying Marathon in 1982 and Texas Oil & Gas Corp. in 1985. Last year, oil and gas contributed more than half of the company`s sales, while its steel business accounted for only one-third.
But the sharp drop in energy prices has hurt the company`s results and its stock performance, while low prices and stiff foreign competition continue to plague its steel business.
For the first half of 1986, a $398 million writedown of oil inventory values caused USX to post a loss of $235 million. In the last year, USX`s stock has fallen from a high of $33 a share.
Adding to its recent woes, the company has been hit by a costly strike by the United Steelworkers since Aug. 1.
USX has several so-called ”shark repellants” at the ready in case of a hostile takeover attempt. Company directors are elected on staggered three-year terms, and amending the corporate bylaws requires approval of two- thirds of its shares outstanding.
