Stalking Texaco

The $10 billion battle royal between Texaco and Pennzoil suddenly became more of a free-for-all last week. Robert Holmes a Court, an Australian financier and aggressive corporate raider, informed the U.S. Securities and Exchange Commission that he had bought more than 15.5 million, or 6.4%, of Texaco's 242 million outstanding shares for $541 million "exclusively for purposes of investment." The Australian tycoon said he has no intention of mounting a takeover bid for the third-ranking U.S. oil company (1986 revenues: U.S. oil company (1986 revenues: $32.6 billion). But Wall Street experts believe that whatever Holmes a Court is planning, his purchase may have thrown open the bidding on Texaco as the mammoth firm winds its way through Chapter 11 bankruptcy proceedings.

Holmes a Court, 49, a soft-spoken lawyer who is reputedly Australia's wealthiest citizen, controls worldwide industrial and media properties through his holding company, Bell Group (1986 revenues: $1.5 billion). From that base, he has launched sallies against Broken Hill Proprietary, a huge Australian steel, oil and gas producer, and other big firms. A few months ago he engaged in a bidding war with Media Mogul Rupert Murdoch over the Herald and Weekly Times, Australia's largest media group. Last August Holmes a Court disclosed that he was seeking a 15% stake in USX, the steel giant. As takeover speculation pushed the price of the stock upward, he reportedly took a profit on a block of his shares.

Texaco shares hopped from 36 5/8 to 37 1/2 the day of Holmes a Court's purchase announcement. But in view of the company's oil reserves and other holdings, many Wall Street analysts still consider its stock sharply undervalued. Holmes a Court said as much in a letter informing Texaco Chief Executive James Kinnear of his investment: "The intrinsic value of Texaco's assets is substantially higher." Texaco agrees. In a statement, the company declared, "We assume that he shares the view expressed by others that . . . the stock is a good long-term investment."

Some Texaco creditors are said to hope that an eventual Holmes a Court takeover of the company would force a settlement of its long legal war with Houston-based Pennzoil. That struggle has raged since November 1985, when a Texas jury slapped Texaco with a $10.5 billion fine for interfering with a merger agreement between Pennzoil and Getty Oil, a judgment that finally led to Texaco's bankruptcy filing in April. On the other hand, Holmes a Court's purchase may mean that he believes a settlement between the two sides is in the wind, a development that would push up Texaco's stock price and earn Holmes a Court a fast profit.