1. T. Boone Pickens: Early Life and Education
  2. T. Boone Pickens: Success Story
  3. T. Boone Pickens: Net Worth
  4. T. Boone Pickens: Famous or Infamous?
  5. T. Boone Pickens: Famous Quotes

Graduating with a degree in geology in 1951, Pickens took a job with Phillips Petroleum, where he worked for three years. In 1954, Pickens borrowed $2,500 from two investors to form Petroleum Exploration, Inc., an oil and gas company. Shortly afterward, he founded Altair Oil & Gas Co. to explore oil and gas opportunities in western Canada.

Pickens merged the two companies in 1956 to create Mesa Petroleum, the company where he would make his name and his fortune. In his four decades at the helm, Mesa grew to become one of the largest and best-known independent energy exploration and production companies in the U. S.

Mesa thrived and started trading on the American Stock Exchange in 1967. And just a year later, T. Boone Pickens began to make one of the first moves that would distinguish him from his fellow oil tycoons—he launched a hostile takeover bid of Hugoton Production Company, which owned the rights to an enormous gas field and was 30 times the size of Mesa. The company was, in Pickens’ opinion, poorly run and not getting fair prices for its gas.

As happened with many of Pickens’ later takeover bids, Hugoton’s board and management rejected his initial offer of a merger. So he took a large position in Hugoton stock, and began his first hostile takeover. Because Mesa couldn’t afford to buy 50% of Hugoton shares with cash, it made an unsolicited offer to buy them with shares of its own newly created preferred stock. It was a very rare maneuver in 1969.

“We were flying without instruments,” Pickens recalled.

Despite buying only 2% of the Hugoton shares on the market, Mesa’s hostile bid drove the market value of Hugoton from $77 million to $137 million in just a few weeks. It wasn’t the first time that a hostile takeover bid by Pickens would significantly drive up a company’s value.

To woo Hugoton investors into the deal, the new Mesa preferred shares would offer a $2.50 dividend, up from the $2 that Hugoton shares paid.

But Hugoton’s management wasn’t about to go down without a fight and agreed to merge with Los-Angeles-based Reserve Oil & Gas. Pickens responded by reaching out personally to Hugoton’s board, large shareholders, equity analysts and business journalists to sell Mesa as the better merger partner. At one point in his campaign, Pickens ruined a business suit helping a major shareholder herd cows in deep mud.

After a lengthy series of battles in the Hugoton boardroom in which Pickens out-argued, outspent, out-hustled and outlasted his opponents, the merger was approved in April 1969.

“The Hugoton deal is still the biggest acquisition we ever made,” Pickens said.

The deal also gave Pickens some essential insight into the way that companies run, or rather, don’t run. Executives and management in corporate America often fell into what he called “a pattern of ‘Ready, Aim, Aim,’” rather than taking action.

Mesa grew through the 1970s, buying more and more of the natural gas reserves in the Hugoton gas fields, which spread across Kansas, Oklahoma and Texas. The sprawling field, which has been in use since the 1920s, is the fifth largest source of natural gas in the United States.

By the early 1980s, Mesa had become one of the largest independent energy companies in the world. Armed with the Hugoton experience, as well as lessons from a few other successful and failed acquisitions, Pickens was ready to take on some of the behemoths of the industry.

In May 1982, he tried to acquire a controlling interest in Cities Service Company, a mid-sized oil company, which ignited a bidding war among a number of oil industry rivals. As with Hugoton, but on a much larger scale, the price of Cities Service stock soared. Although he lost out to Occidental Petroleum, Mesa raked in more than $31 million in profit on the merger deal.

This practice was later called “greenmailing.” It involved taking a sizable position in a company, then selling the shares that had been inflated in anticipation of a takeover. While it may have been a successful strategy in many instances, Pickens also saw it as a way to implement important changes at the companies in which he invested.

He would go on to make money and win publicity with unsuccessful takeover attempts of Gulf Oil, Philips Petroleum and Unocal. His bid for Gulf Oil landed Pickens on the cover of the March 1985 issue of Time Magazine.

It was during this period that Pickens used his influence and celebrity to preach his message of maximizing shareholder value. While it’s the stuff of mission-statement boilerplates for nearly all publicly traded companies nowadays, Pickens’ message was radical at the time. He stressed that that shareholders, not management, are the true owners and rightful beneficiaries of a company. He also said that shareholders should speak out when they feel their and management’s interests diverge. He insisted that companies give employees the opportunity to become shareholders, through stock options, or share purchase plans.

Those principles were an important part of Mesa’s bid for Gulf. And though Pickens failed in that particular takeover bid, Gulf and most of the other energy giants eventually acceded to Pickens’ shareholder-centric demands.

It was in his 1989 hostile takeover bid for Unocal that Pickens’ run as the “King of the Corporate Raiders” is widely thought to have come to an end. In his bid for the company, Pickens made a tender offer in which the first set of shareholders could sell out for $54 per share, while the second group would be paid in what a court later called “junk bonds.” His aim was to have shareholders rush to sell to be part of the first group. Unocal responded by offering to repurchase its own shares at $72, and to explicitly exclude Pickens from the offer. Pickens sued, lost, then appealed and won. But it had become impossible to deny that more companies had constructed elaborate legal defenses against hostile takeovers that would make many of Pickens’ tactics less effective.

Nonetheless, Pickens’ advocacy was more than just rhetorical camouflage for his hostile takeover bids. He played a major role in creating the United Shareholders Association (USA), which advocated for a number of corporate reforms aimed at giving shareholders more say in how companies are managed. Its successful reforms include the 1998 SEC decision to approve a one-share, one-vote rule.

After a string of ill-timed bets on the natural-gas market, Pickens sold Mesa to Richard Rainwater in 1996.

By then, he had won the war for shareholder rights and his legacy was firmly in place. “Boone’s once revolutionary ideas are so completely taken for granted that they have become linchpins of the economy,” Fortune magazine wrote at the time.

Not one to retire, Pickens, then almost 70, founded BP Capital Management (“BP” standing for "Boone Pickens" not British Petroleum) in 1997. The firm manages two hedge funds that invest in energy companies. At the same time, he has been touring the country trying to spread another message: That natural gas is the viable vehicular fuel that will diminish American dependence on foreign sources of oil. That message, especially as it relates to the “Pickens Plan” for energy independence, has been one of his primary projects since 2008.


T. Boone Pickens: Net Worth
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