But as Pennzoil executives celebrated their pending acquisition of Getty Oil Co. in early 1984, another buyer was circling.Texaco, which traces its roots to the 1901 Spindletop gusher, made a sweeter offer. Getty accepted, and one of the ugliest corporate courtroom brawls in U.S. history was about to get underway.
When it was over, a Texas jury determined that Texaco had intentionally interfered with Pennzoil's deal and awarded a jaw-dropping $10.53 billion to Pennzoil. It was the largest civil verdict in the nation's history up to that time and perilously close to Texaco's market value of $13 billion.
"It was a remarkable case that two large oil companies would go head to head like that," said Harry Reasoner, long-time lawyer at Vinson & Elkins.
One of the great mysteries was why Texaco didn't settle the case, said Reasoner, who handled subsequent appeals on behalf of Pennzoil. Companies usually settle disputes before they ever reach a jury - especially when so much is on the line.
Getty was prized for its extensive crude reserves, and in the early 1980s, as Pennzoil looked to expand its reserves, it eyed the company founded by the legendary oil baron J. Paul Getty. Pennzoil agreed to pay $5.2 billion to acquire just under half the company. Company leaders shook on the deal in New York, celebrated with champagne, and quickly issued press releases announcing the purchase.
Jan. 3, 1984
Pennzoil's board agreed to buy Getty Oil for $5.2 billion. A day later, the companies issued news releases announcing the deal.
Jan. 5, 1984
Texaco board meets to make counter offer for $10.1 billion. Later that day, Texaco's chairman meets secretly with Getty Oil trustees and offers a higher price than Pennzoil. Texaco agrees to indemnify Getty Oilif Pennzoil bringsa lawsuit.
Jan. 6, 1984
Getty board votesto withdraw its Pennzoil deal and sell the company to Texaco instead.
Feb. 8, 1984
Pennzoil sues Texaco in Houston, alleging tortuous interference
July 9, 1985
Jury trial begins and will last 4½ months.
Nov. 19, 1985
Jury in Houston awards Pennzoil $10.53 billion in damages, the largest verdict in U.S. history at the time.
Dec. 10, 1985
Visiting state District Court Judge Solomon Casseb Jr. enters the jury verdict, adding interest, bringing the total to $11.1 billion.
April 12, 1987
Texaco files for bankruptcy protection.
Dec. 11, 1987
Texaco agreesto settle with Pennzoil for$3 billion.
Texaco, meanwhile, had recently drilled some dry holes and saw an opportunity to scoop up crude reserves estimated at 1 billion barrels. A couple of days after the Pennzoil deal was announced, Texaco swooped in to offer $10.1 billion. The Getty board quickly cast off Pennzoil, and issued another press release announcing the sale to Texaco.
Outraged, Pennzoil sent a telex to Texaco telling the company to lay off and asked a Delaware court to block the sale to Texaco. The judge declined, but suggested that Pennzoil might have reason to claim a contract that was already in place when Texaco came around with its checkboo