History
Pure Resources, formed in 2000 from Unocal's Permian unit and Titan, grew by buying assets in 2001, then faced Unocal's 2002 takeover offer and ended its registration.
2000-2001: Built by merger and acquisition
Pure Resources was formed in December 1999 and took its main shape on May 25, 2000. On that date Union Oil of California contributed its Permian Basin unit in return for 32,708,067 shares, and Titan Exploration merged into the company. Based in Midland, Texas, it was led by Jack D. Hightower as chief executive, president and chairman.
The record then shows two cash-funded deals in 2001. On January 31, Pure bought oil and gas properties, mineral and royalty interests and partnership interests from International Paper for about $261 million in cash, after adjustments of about $39 million from a $300 million price. The package carried about 25 million barrels of oil equivalent of proved reserves, 69% of it natural gas. Pure paid with cash on hand and its Chase Manhattan bank credit facilities. The properties earned revenues of $122.1 million in 2000, up from $74.0 million in 1999.
In May a Pure subsidiary bought about 85% of Hallwood Energy's common stock and about 78% of its preferred stock through a tender offer at $12.50 and $10.84 per share. Pure funded this with a new $200 million unsecured credit line from CSFB and First Union, plus its Chase facilities. The merger closed on May 30, 2001, cashing out the remaining holders at the same prices. Hallwood became a wholly owned subsidiary, at a total cost of about $268 million including assumed debt.
2002: The Unocal offer and the exit
The record is quiet for the following year. It picks up in September 2002, when Union Oil, a Unocal subsidiary and Pure's major holder since its formation, opened an exchange offer of 0.6527 Unocal share for each Pure share. It required Unocal to reach at least 90% of Pure, with a short-form merger on the same terms to follow. About 50.6 million Pure shares were outstanding.
On September 27 Pure's Special Committee called the offer inadequate and urged shareholders not to tender. It said Unocal had made no change after a September 16 meeting and had refused to give more due diligence information. Hightower's severance on completion would be about $3,645,000 before any tax gross-up.
Unocal raised its offer to 0.70 on October 2 and to 0.74 on October 9. A Delaware Chancery Court order dated October 3 prompted Pure to explain that the committee's powers had been narrowed on September 10-11, and it could not pursue a sale of the company. A press release listed in the filings said the committee had recommended the amended offer. Hightower and other officers signed an agreement to tender.
Pure restated its response on October 15 and added further fairness analyses on October 23. On November 6, 2002, its securities were notified for removal from listing, and on November 7 it terminated registration of a class of securities, ending its reporting obligation for them. The filings do not state the offer's final outcome.
Written from the 9 story beats below (2001 to 7 Nov 2002), which come from the company's own announcements and filings.