2 ‘Raiders’ Defend Their Tactics, Goals : Icahn, Pickens Say Lax Management’s to Blame for Takeovers

WASHINGTON —  Carl Icahn, the New York investor fighting to win control of Phillips Petroleum Co., told a congressional panel Wednesday that he has learned that it takes not only a lot of money but a lot of “outrage” to take on an entrenched management.

At a House hearing convened to study a broad range of corporate takeover issues, Icahn and T. Boone Pickens--an earlier Phillips suitor--said the companies targeted for buy-outs almost always find themselves under attack because mediocre managers have been operating without their shareholders’ interests at heart.

Neither side would predict the outcome of the current battle, although Icahn told the hearing: “I think I’ve won. I hope I’ve won.”

More Than Financial Price

He declined to discuss the Phillips situation afterward, saying only: “I’m optimistic.”

The hearing was before the telecommunications, consumer protection and finance subcommittee of the Energy and Commerce Committee.

Icahn said so-called raiders like he and Pickens often pay more than a financial price for their efforts and suggested that some wealthy investors shy away from such attempts to avoid the glare of publicity.

While not acknowledging any lack of commitment when his early efforts to gain control of Phillips started in January, Icahn made clear that his zest for battle increased with the intensity of the fight waged by Phillips.

“I’m not Robin Hood, but I really believe in what I’m doing,” Icahn said, adding that his determination to fight to the end means he will lose $20 million if not successful.

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“A lot of people with the money to do it don’t want to get into these things because you start reading about yourself in the newspaper,” Icahn said. “I used to read that I’m a gangster. Now they say I’m not real.

“If you’re wealthy enough, you say, ‘Why do I need this?’ After a while you develop a sense of outrage and say, ‘To heck with it, I’m not going to back down.’ ”

Icahn referred to Phillips newspaper ads questioning whether he was “for real” in the sense of whether he could put together the credit that would be required to follow through on his offer.

While avoiding specifics on the current status of the Phillips takeover effort, Icahn and Pickens provided insight into the way raiders view the managers they attack.

“Mergers don’t divert management from running companies,” Pickens said. “Mergers divert management attention from hunting and fishing camps.”

The complicated agreement under which Pickens dropped his bid for Phillips required him to vote for a controversial recapitalization plan still up in the air five days after stockholders met to vote on the plan, but Pickens left no doubt that he was still not enchanted with Phillips management.

“I don’t know why it takes you so long to count the vote,” Pickens said in one exchange with Phillips Executive Vice President Charles M. Kittrell.

Kittrell said he resented being characterized as part of an arrogant management.

“I think I have more respect for the shareholders of Phillips than anyone at this table,” he said, clarifying in the next breath that he was talking about those who had held stock for 30, 40 or 50 years and “had faith in the company,” rather than the “Johnny-come-latelies.”

Pickens, who failed earlier in an attempt to gain control of Gulf Corp. and several other oil companies, said he resented assertions that he is only interested in driving up the price of companies and making a quick profit.

“We were sincerely interested in taking over and running all these companies,” he said. “I wish someone would give me a chance to run one of these companies. I’m trying as hard as I can. But some of these egos of these managements will do anything to stop you.”

Harrison J. Goldin, New York City comptroller and head of a newly formed group of institutional investors, said the “invester ferment” spawned by people like Icahn and Pickens has benefited pension funds and other large groups of shareholders.

Pickens also reiterated to the panel that his recent large purchases of Unocal Corp. stock do not mean that he intends to try to take over the California company.

Pickens testified that a group he heads has acquired 17 million shares of Unocal--about 9.7% of its stock--for “investment purposes only.”

Pickens said “when we change that posture” toward Unocal “we’ll file that” intention with the Securities and Exchange Commission.