A furious Pennzoil filed suit and started a bitter legal feud that lasted for the following four years, which pushed Texaco into bankruptcy, until a settlement of $3 billion, brokered by Carl Icahn, was reached. At the time, Cal Icahn, a noted corporate raider and financier, accumulated over 13% of Texaco's stock in a failed attempt to take control of the board.
However, the settlement, in which Icahn acted as a catalyst, removed the dark clouds hanging over Texaco and Pennzoil. As a result, both companies were able to move on and refocus on business. The resulting gains in stock prices also got Icahn some sizable financial windfall.
In the end, the biggest winners of all were the law firms, as Texas lawyer Joseph Jamail (whom Icahn mentioned in the video below) reportedly got $600 million for leading Pennzoil's attack against Texaco.
Here is a rare video of Carl Icahn recounting the event at Caroline's Comedy Club in Manhattan, New York. (Warning: a bit PG-13 at around 1:21 and the very end of the clip.)
Dian L. Chu
About the author:
Amit Chokshi is the founder and owner of Kinnaras and affiliated companies and is responsible for security analysis, selection, portfolio management, and Firm operations. Prior to founding Kinnaras, he worked as an associate at the Royal Bank of Scotland ("RBS") in the firm's Corporate Advisory Services group, which provided corporate finance and mergers and acquisition ("M&A") services to the firm's clients with a particular emphasis on private equity firms. Amit also worked at Morgan Stanley and received a B.S. in Finance from Bryant University and an MBA from Emory University. In addition to passing the NASD Series 7, 63, and 65 exams, Amit is also a CFA Charterholder and on the Board of the Stamford CFA Society. Amit has appeared on Bloomberg Radio and has also been quoted in various publications regarding Firm-specific holdings.