The Taking of Getty Oil
The ten-billion-dollar judgment, awarded in November, 1985, by a Houston court, against Texaco to Pennzoil took the corporate world by surprise. Perceived as a routine contracts case, the lawsuit had received minimal coverage even in the business press. It is the largest damages award yet made in an American business case.
Three-and-a-half years of haggling and infighting preceded the judgment. In May, 1982, Gordon Getty (one of three surviving sons of founder J. Paul Getty) became sole trustee of the Sarah C. Getty Trust, which owned 40 percent of Getty Oil’s stock. Gordon Getty then began to maneuver for control of the company, despite opposition from the senior management and from his own family. Pennzoil, at the same time, was looking for another acquisition, as its chief executive officer had long dreamed of heading a major oil company. At a protracted board meeting in January, 1984, the directors of Getty Oil and Pennzoil made an “agreement in principle” for Pennzoil to buy a substantial bloc of Getty stock. The following week, however, Texaco offered a higher price and bought the same stock. The lawsuit was based upon the agreement and sale.
Steve Coll, a correspondent for THE WASHINGTON POST and author of DEAL OF THE CENTURY: THE BREAKUP OF AT&T, has painstakingly reconstructed telephone conversations, meetings, and occasional written memoranda to set out events leading to the litigation. His sources are primarily conversations with and letters from the principals. Throughout, he succeeds admirably in preserving a reporter’s objectivity, not condemning anyone or commenting on the merits of anyone’s position.
The last chapter summarizes quickly the events of 1986 and early 1987 which followed the judgment. The true final chapter to this story has not yet been written, but this meticulously researched book does much to put the headlines in context.