Chapter 4 - Making Hard Decisions R. T. Clemen, T. Reilly...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Making Hard Decisions R. T. Clemen, T. Reilly Chapter 4 Making Choices Lecture Notes by: J.R. van Dorp and T.A. Mazzuchi http://www.seas.gwu.edu/~dorpjr/ Slide 1 of 58 COPYRIGHT 2006 by GWU Draft: Version 1 Making Choices Chapter 4 aking Hard ecisions R. T. Clemen, T. Reilly Making Hard Decisions R. T. Clemen, T. Reilly Chapter 4 Making Choices Lecture Notes by: J.R. van Dorp and T.A. Mazzuchi http://www.seas.gwu.edu/~dorpjr/ Slide 2 of 58 COPYRIGHT 2006 by GWU Draft: Version 1 Texaco Versus Pennzoil In early 1984, Pennzoil and Getty Oil agreed to the terms of a merger. But before any formal documents could be signed, Texaco offered Getty a substantially better price, and Gordon Getty, who controlled mos of the Getty Stock, reneged on the Pennzoil deal and sold to Texaco. Naturally, Pennzoil felt as if it had been dealt with unfairly and immediately files a lawsuit against Texaco alleging that Texaco had interfered illegally in the Pennzoil-Getty negotiations. Pennzoil won the case : in late 1985, it was awarded $11.1 billion , the largest judgment ever in the United States. A Texas appeal court reduced the judgement to $2 billion , but interest and penalties drove the total back up to $10.3 billion . James Kinnear, Texacos Chief executive officer, had said that Texaco would file for bankruptcy if Pennzoil obtained court permission to secure the judgment by filing liens against Texacos assets. Making Hard Decisions R. T. Clemen, T. Reilly Chapter 4 Making Choices Lecture Notes by: J.R. van Dorp and T.A. Mazzuchi http://www.seas.gwu.edu/~dorpjr/ Slide 3 of 58 COPYRIGHT 2006 by GWU Draft: Version 1 Texaco Versus Pennzoil - Continued Furthermore, Kinnear had promised to fight the case all the way to the U.S. Supreme Court if necessary, arguing in part that Pennzoil had not followed Security and Exchange Commission regulations in its negotiations with Getty. In April 1987, just before Pennzoil began to file liens, Texaco offered to Penzoil $2 billion dollars to settle the entire case. Hugh Liedtke, chairman of Pennzoil, indicated that his advisors were telling him that a settlement between $3 billion and $5 billion would be fair. What should Hugh Liedtke do? 1. Accept $2 Billion 2. Refuse $2 Billion and counter offer $5 Billion Making Hard Decisions R. T. Clemen, T. Reilly Chapter 4 Making Choices Lecture Notes by: J.R. van Dorp and T.A. Mazzuchi http://www.seas.gwu.edu/~dorpjr/ Slide 4 of 58 COPYRIGHT 2006 by GWU Draft: Version 1 Texaco Versus Pennzoil Decision Tree Low High 10.3 Medium 5 Final Court Decision Accept $3 Billion Refuse Low High 10.3 Medium 5 Final Court Decision 5 2 Max Settlement Amount ($ Billion ) 3 Accept $2 Billion Counteroffer $5 Billion Texaco Accepts $5 Billion Texaco Refuses Counteroffer Texaco Counter - offers $3 Billion Making Hard Decisions R. T. Clemen, T. Reilly Chapter 4 Making Choices Lecture Notes by: J.R. van Dorp and T.A. Mazzuchi http://www.seas.gwu.edu/~dorpjr/ Slide 5 of 58...
View Full Document

Page1 / 58

Chapter 4 - Making Hard Decisions R. T. Clemen, T. Reilly...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online