<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
(AMENDMENT NO. 31)
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
PENNZOIL COMPANY
(Name of Subject Company)
PENNZOIL COMPANY
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $0.83 1/3 PER SHARE
(including the associated Preferred Stock Purchase Rights)
(Title of Class of Securities)
709903 10 8
(CUSIP Number of Class of Securities)
LINDA F. CONDIT
CORPORATE SECRETARY
PENNZOIL COMPANY
PENNZOIL PLACE, P.O. BOX 2967
HOUSTON, TEXAS 77252-2967
(713) 546-8910
(Name, address and telephone number of person authorized
to receive notice and communications on behalf of the person(s) filing
statement)
Copies To:
<TABLE>
<S> <C>
Moulton Goodrum, Jr. Charles F. Richards, Jr.
Baker & Botts, L.L.P. Richards, Layton & Finger
One Shell Plaza One Rodney Square
Houston, Texas 77002-4995 P.O. Box 551
(713) 229-1234 Wilmington, Delaware 19899-0551
(302) 658-6541
</TABLE>
<PAGE> 2
This Amendment No. 31 (this "Amendment") amends and supplements the
Solicitation/Recommendation Statement on Schedule 14D-9, as amended, originally
filed on July 1, 1997 by Pennzoil Company, a Delaware corporation ("Pennzoil"
or the "Company"), relating to a tender offer commenced by Resources Newco,
Inc., a wholly owned subsidiary of Union Pacific Resources Group Inc. ("UPR"),
on June 23, 1997.
All capitalized terms used in this Amendment without definition have the
meanings attributed to them in the Schedule 14D-9.
The items of the Schedule 14D-9 set forth below are hereby amended by
adding the following:
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
86 Letter from Jack L. Messman to James L. Pate dated
October 6, 1997.
87 Press Release of UPR dated October 6, 1997.
88 Press Release of Pennzoil dated October 6, 1997.
</TABLE>
<PAGE> 3
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
PENNZOIL COMPANY
Dated: October 6, 1997 By: /s/ James L. Pate
James L. Pate
Chairman of the Board, President
and Chief Executive Officer
3
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
86 Letter from Jack L. Messman to James L. Pate dated
October 6, 1997.
87 Press Release of UPR dated October 6, 1997.
88 Press Release of Pennzoil dated October 6, 1997.
</TABLE>
<PAGE> 1
EXHIBIT 86
[UNION PACIFIC RESOURCES LETTERHEAD]
October 6, 1997
Mr. James L. Pate
Chairman, President & Chief Executive Officer
Pennzoil Company
700 Milam
P.O. Box 2967
Houston, Texas 77252-2967
Dear Jim:
I am writing to inform you that Union Pacific Resources Group Inc.
(UPR) has revised its offer to purchase shares of common stock of Pennzoil
Company and is now offering to purchase all outstanding shares of Pennzoil
common stock for $84 per share in cash. Pennzoil shareholders will be entitled
to receive $84 per share in cash, either in the tender offer or in a subsequent
merger between Pennzoil and a subsidiary of UPR. Our offer is not subject to a
financing condition.
Our all cash offer presents a clear alternative for Pennzoil
shareholders:
a) receive $84 per share in cash today, or
b) hold Pennzoil stock indefinitely in the hope that, sometime in the
future, Pennzoil's undisclosed strategic plan might provide more
than $84 per share in present value.
We believe our $84 per share cash offer fully and fairly values all of
Pennzoil's businesses. Clearly, industry analysts and your own shareholders
overwhelmingly agree.
You have claimed, as an excuse for denying your shareholders the
opportunity to accept our offer, that we have underestimated the long-term
potential of Pennzoil's international (i.e., non-North American) exploration
and production assets. Based on our own assessment, we disagree. However, if
Pennzoil will begin negotiations, UPR is prepared to consider a transaction
structure which would provide Pennzoil shareholders the opportunity to benefit
directly from a future increase in value, if it occurs, of Pennzoil's
international E&P assets, above the $600 million in value that UPR has ascribed
to those assets. This international valuation assumes that the Karabakh
prospect can be commercially developed.
<PAGE> 2
Mr. James L. Pate
October 6, 1997
Page 2
Although we cannot make this additional value feature a part of our
tender offer at this time, because we need Pennzoil's cooperation to implement
this approach, there are several ways this could be accomplished. For example,
one way might be to form an entity to hold the international E&P assets and to
distribute to every Pennzoil shareholder, in addition to $84 per share in cash,
a combination of target or common stock and related warrants in that entity.
This type of structure would allow Pennzoil shareholders to benefit directly
from a future increase in value, if it occurs, of the international assets,
which Pennzoil management has been promising.
Since our initial offer in June, you have had ample time to explain to
your shareholders how Pennzoil, on its own, can deliver more than $84 per share
in present value. In our opinion, you have failed to do so. There can be no
excuses for continuing to deny Pennzoil shareholders their right to choose
between our $84 cash offer and your plan. The only obstacle to giving Pennzoil
shareholders the opportunity to choose between these alternatives is the
refusal by Pennzoil's Board of Directors to redeem Pennzoil's poison pill and
to remove its other takeover defenses. We are willing to accept the judgment of
your shareholders as to which of the two alternatives they prefer. Are you? If
not, we can only conclude that Pennzoil fears the decision its own shareholders
will make.
Our preference is, and always has been, to negotiate a transaction with
Pennzoil. We invite you and your Board to begin constructive negotiations with
us regarding a merger of the two companies.
Sincerely,
/s/ JACK L. MESSMAN
Jack L. Messman
cc: Pennzoil Company Board of Directors
<PAGE> 1
Exhibit 87
Union Pacific Resources Group Inc.
NEWS RELEASE [UPR Logo]
- --------------------------------------------------------------------------------
UPR REVISES OFFER FOR PENNZOIL TO
$84 PER SHARE CASH FOR ALL SHARES
ALL CASH PROPOSAL ELIMINATES PENNZOIL EXCUSES
FOR DENYING SHAREHOLDERS RIGHT TO CHOOSE
UPR ALSO PROPOSES OPPORTUNITY FOR PENNZOIL SHAREHOLDERS TO BENEFIT
FROM ANY INCREASE IN VALUE OF PENNZOIL INTERNATIONAL E&P PROPERTIES,
IF PENNZOIL NEGOTIATES
FOR IMMEDIATE RELEASE -- FORT WORTH, TX - OCT. 6, 1997 -- Union Pacific
Resources Group Inc. (NYSE: UPR) today announced a revised offer to acquire
Pennzoil Company. UPR is now offering to purchase all outstanding shares of
Pennzoil common stock for cash at $84 per share. This offer is not conditioned
upon financing.
"Our revised offer requires the Pennzoil Board to demonstrate to its
shareholders how Pennzoil, on its own, can provide value greater than our
offer," said Jack L. Messman, Chairman and Chief Executive Officer of UPR.
"This all cash proposal offers Pennzoil shareholders two clear alternatives:
receive $84 per share in cash today from UPR, or hold Pennzoil stock
indefinitely in the hope that Pennzoil's undisclosed strategic plan might
someday provide more than $84 per share in present value.
In a letter today to Pennzoil Chairman James L. Pate, Mr. Messman said, "Since
our initial offer in June, you have had ample time to explain to your
shareholders how Pennzoil, on its own, can deliver more than $84 per share in
present value. In our opinion, you have failed to do so," Mr. Messman
continued. "There can be no excuses for continuing to deny Pennzoil
shareholders their right to choose between our $84 cash offer and your plan.
The only obstacle to giving Pennzoil shareholders the opportunity to choose
between these alternatives is the refusal by Pennzoil's Board of Directors to
redeem Pennzoil's poison pill and to remove its other takeover defenses. We are
willing to accept the judgment of your shareholders as to which of the two
alternatives they prefer; are you? If not, we can only conclude that Pennzoil
fears the decision its own shareholders will make."
<PAGE> 2
-2-
UPR PROPOSES OFFERING PENNZOIL SHAREHOLDERS UPSIDE
POTENTIAL OF INTERNATIONAL E&P PROPERTIES, IF PENNZOIL WILL NEGOTIATE
In the letter, Mr. Messman also wrote, "We believe our $84 per share cash offer
fully and fairly values all of Pennzoil's businesses. Clearly, industry
analysts and your own shareholders overwhelmingly agree.
You have claimed, as an excuse for denying your shareholders the opportunity to
accept our offer, that we have underestimated the long-term potential of
Pennzoil's international (i.e., non-North American) exploration and production
assets. Based on our own assessment, we disagree. "However, if Pennzoil will
begin negotiations, UPR is prepared to consider a transaction structure which
would provide Pennzoil shareholders the opportunity to benefit directly from a
future increase in value, if it occurs, of Pennzoil's international E&P assets,
above the $600 million in value that UPR has ascribed to those assets."
Mr. Messman also noted that the international valuation assumes the commercial
viability of Pennzoil's high-profile Karabakh prospect in the Caspian Sea, and
that Pennzoil has indicated that results from the first exploratory well should
be known soon.
Mr. Messman's letter to Mr. Pate goes on to state: "Although we cannot make
this additional value feature a part of our tender offer at this time, because
we need Pennzoil's cooperation to implement this approach, there are several
ways this could be accomplished. For example, one way might be to form an
entity to hold the international E&P assets and to distribute to every Pennzoil
shareholder, in addition to $84 per share in cash, a combination of target or
common stock and related warrants in that entity."
The full text of Mr. Messman's letter to Mr. Pate is attached.
UPR'S PROVEN BUSINESS MODEL WOULD QUICKLY
INCREASE PRODUCTION FROM PENNZOIL'S OIL AND GAS PROPERTIES
In announcing the all cash tender offer today, Mr. Messman also reiterated the
powerful business rationale for acquiring Pennzoil: "This combination is driven
by the opportunity to apply UPR's proven business model to Pennzoil's drill
sites and create value through growth -- something Pennzoil has been unable to
do. Pennzoil has a substantial domestic property base with unexplored
opportunities for development and exploratory drilling. By increasing
production and reserves from those assets, this acquisition will allow UPR to
perform even beyond our established growth targets."
<PAGE> 3
Mr. Messman added that, "After acquiring Pennzoil, we intend to maintain a
strong investment grade credit rating and the financial flexibility to fund our
business plan. Following the closing of the Pennzoil acquisition, we plan to
refinance our acquisition financing through a combination of asset sales and
the public or private sale of equity and debt securities.
TERMS OF THE TRANSACTION
Pennzoil shareholders will be entitled to receive $84 per share in cash, either
in the tender offer or in a subsequent merger between Pennzoil and a
wholly-owned subsidiary of UPR. This proposal revises the offer UPR made on
June 23, 1997 to acquire Pennzoil for a combination of $84 per share in cash
for 50.1% of Pennzoil's outstanding shares and UPR stock for the remaining
shares. The revised offer is subject to the same conditions as the original
offer.
A total of 61.5% of Pennzoil shares were tendered into UPR's offer as of the
initial expiration date of July 21, 1997. The tender offer was previously
scheduled to expire on October 29, 1997, prior to being extended today to
midnight New York time on November 5, 1997. At the close of business on October
3, 1997, a total of 18,187,684 Pennzoil shares, or over 38.5% of outstanding
shares, still remained tendered. The normal practice for many investors in a
tender offer is to withdraw their shares temporarily after the initial
expiration date in order to give themselves trading flexibility prior to
re-tendering at a later date.
As with the original offer, the revised offer will generate immediate and
ongoing accretion to UPR's cash flow per share, which is the primary
measurement of value in the E&P industry, while it will have a near-term
dilutive effect on earnings per share. Based on the revised offer, UPR
estimates that after completion of the Pennzoil acquisition, using debt to
finance the purchase of Pennzoil common stock and assuming no refinancing of
that acquisition debt, 1998 discretionary cash flow per share could increase
by approximately 45% and 1998 earnings per share could decrease by
approximately 75%, as compared to 1998 consensus estimates. The Company's
estimates are subject to a number of assumptions, including a year-end 1997
completion of the acquisition. These per share figures will be affected as the
Company implements the refinancing of acquisition debt through the contemplated
combination of asset sales and sale of equity and debt securities.
UPR is the largest domestic independent oil and gas exploration and production
company. Headquartered in Fort Worth, Texas, UPR has been the #1 domestic
driller for the past five years.
<PAGE> 4
This press releases is not an offer to purchase shares of Pennzoil, nor is it an
offer to sell any securities which may be issued in a merger involving Pennzoil
and a subsidiary of UPR. The cash tender offer by a subsidiary of UPR to acquire
all of Pennzoil's common shares will be made solely by the Offer to Purchase,
the Supplement thereto, and the related Letter of Transmittal. Any issuance of
securities in any merger involving Pennzoil and a subsidiary of UPR would have
to be registered under the Securities Act of 1933, as amended, and such
securities would be offered only by means of a prospectus complying with such
Act.
This press release contains forward-looking statements that involve risks and
uncertainties, including statements regarding future drilling and development
activities, the achievement of future growth targets, estimates of
discretionary cash flow and earnings per share, future financing activities and
the effect thereof and other matters. Actual results may vary materially for
the reasons detailed in UPR's SEC reports, including its reports on Form 10-K
for the year ended December 31, 1996 and on Form 10-Q for the quarter ended
June 30, 1997.
# # # #
MEDIA CONTACTS: INVESTOR RELATIONS CONTACT:
Walter Montgomery Michael Liebschwager
October 6 Only: 817-877-6527 817-877-6531
After October 6: 212-484-6721
Pat Doyle On the Internet: www.upr.com
817-877-6527
<PAGE> 1
EXHIBIT 88
[PENNZOIL LETTERHEAD]
Contacts:
Robert Harper Brian Faw/Joele Frank
Corporate Communications Abernathy MacGregor Group
713/546-8536 212/371-5999
PENNZOIL COMPANY BOARD OF DIRECTORS TO REVIEW TENDER OFFER
Houston, TX, October 6, 1997 -- Pennzoil Company (NYSE:PZL) reported that its
Board of Directors will review, in due course, the unsolicited revised tender
offer announced today by Union Pacific Resources (NYSE:UPR) (UPR).
In the meantime, Pennzoil urges all its stockholders to take no action with
respect to the revised UPR proposal until Pennzoil's Board of Directors has
made its recommendation.
Pennzoil Company explores for and produces crude oil and natural gas,
manufactures and markets premium quality lubricants, including America's top
selling motor oil, and is the parent company of Jiffy Lube International, the
world's largest franchiser of fast oil change centers.
###
