In October, Kirk Kerkorian's holding company, Tracinda, made a tender offer for shares of refiner Tesoro (NYSE: TSO) at $64. Tesoro officially said it was "neutral" on the offer, but immediately adopted a shareholder rights plan, or poison pill. The company's move successfully prompted Kerkorian to withdraw his offer. Sure, the billionaire has plenty of money, but Kerkorian must be at least a little grateful. In the time since his offer for Tesoro, the company's shares have slid to less than $30, saving him a barrel of cash.
Buyout talk about refiners seems to be constantly circulating. Limited domestic capacity makes them valuable assets. However, higher crude oil prices and tighter refining margins are weighing heavily on the stock prices. Tesoro, Valero (NYSE: VLO), and Western Refining (NYSE: WNR) are all well off their 52-week highs.
But if Tesoro wasn't interested a few months ago, it certainly wouldn't want to hear any offers based on its current depressed share price. Or would it? Last week, the company ended the poison pill it had put in place. Although the plan was set to expire on its own in 2010, the board took deliberate action to end it early.
Further confusing the situation, Tesoro reported Wednesday in a Securities and Exchange Commission filing that it had fired its auditor. The company said it had "no disagreements" with its former accountant, so the reason might be related to fees, or something else as innocent, but it sure seems like a strange coincidence.
What Tesoro's board hopes to accomplish with these actions is open to speculation. However, shareholders would most likely not be pleased to hear any discussion of a transaction at a price lower than Kerkorian's offer, especially so soon after turning him away.
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