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The Battle for Unocal

 Holger Spamann, Amanda Ravich, and Lisa Brem  
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55 pages
Product Type:
Discussion-Based Case Study
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In the 1980s, battles of corporate ownership were fierce, but one oil corporation, Unocal, was prepared to defend itself. President and CEO Fred Hartley did not believe in corporate takeovers; he thought such moves prevented corporations from managing for long-term success. So when T. Boone Pickens, chairman of Mesa Petroleum, announced a tender offer to Unocal shareholders, the Unocal board was determined to outmuscle the corporate raider. No legal precedent existed for the recent phenomenon of hostile takeovers, but Unocal’s general counsel still had to advise the board: how could Unocal be saved?

The case study provides the economic context of Unocal’s decision, surveying the 1980s merger mania, the rise of junk bonds, T. Boone Pickens’s raiding streak, and the moves that Unocal and Mesa made leading up to Mesa’s tender offer. Participants are placed in the strategic and decision-making position of the Unocal board of directors and are asked to consider, from among the business tactics to block a hostile takeover, those options that fulfill the board’s fiduciary duties to the company. Participants work in teams to brainstorm the Unocal board’s next steps, and subsequent class discussion addresses the misguided options available to the board. Participants will also analyze the legality and effectiveness of the strategy Unocal ultimately chose.

Subjects Covered

Corporations, mergers and acquisitions, hostile takeover, corporate raid, tender offers, fiduciary duties, greenmail, junk bonds, petroleum, oil

Learning Objectives

  • Discuss and evaluate a corporate board’s options, fiduciary duties, and ethics when responding to a hostile takeover bid, as well as the potential repercussions of those options.
  • Understand the collective action problem established when shareholders of a company individually evaluate the worth of a company and decide whether to tender, and predict shareholder behavior in new scenarios using payoff matrices.
  • Understand the law related to hostile takeovers and discriminatory self-tenders.


Geographic: United States

Industry: Petroleum/Big Oil

Event Start Date: 1985

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Additional Information

4 Questions with Professor Holger Spamann


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