WALL STREET STOCKS/TENNECO INC <TGT>
Tenneco Inc, a company that has long
been rumored to be a takeover candidate, rose sharply today
when speculation surfaced that investor T. Boone Pickens may be
targeting the company for an acquisition, traders and analysts
said.
    Tenneco spokesman Joseph Macrum said "we have no comment to
make whatsoever." Pickens was not available for comment.
    Traders noted that activity in the stock increased today
after a published report linked Pickens to Tenneco.
    Tenneco rose two points to 48-3/4.
    Paul Feretti, an analyst with New Orleans-based Howard,
Weil, Labouisse, Friedrichs, Inc, said he was not surprised at
market rumors that Tenneco might be the target of a takeover
attempt.
    "It's pure market speculation that Boone Pickens and his
group may be interested," Feretti said.
    "But Tenneco would be a challenge to run because of its
sheer size and diversity. Mr. Pickens is a man who likes a
challenge."
    Pickens, who made an unsuccessful attempt to take over
Dallas-based Diamond Shamrock Corp <DIA> last winter, has made
no secret of his plans to acquire additional natural gas
reserves in the belief that gas prices will stabilize sooner
than oil prices. Tenneco holds natural gas reserves estimated
in excess of 3.5 trillion cubic feet, analysts said.
    Feretti conservatively estimated Tenneco's breakup value at
58 dlrs a share and said the company generated a cash flow of
about 10 dlrs a share "which is probably very attractive to
Pickens." Other analysts, however, estimate a breakup value
well into the 60 dlr a share range.
    "I strongly doubt that there is going to be any hostile
takeover," Drexel Burnham Lambert Inc's Houston-based analyst
John Olson said, putting little credence in the rumors.
    "Tenneco is a gargantuan enterprise with seven billion dlrs
in long-term debt and preferred stock outstanding." He said the
buyer would also have to deal with "the intractable problems"
Tenneco faces with its farm equipment unit and energy
businesses.
    Analysts suggested that Tenneco could use a number of
defensive strategies to fend off an unwanted buyer, such as
spin off some of its non-energy businesses directly to
shareholders, buy back shares or create a limited partnership
out of its natural gas pipeline interests.
    An analyst who asked to remain unidentified, discouraged
the Pickens rumor. "Pickens has a plateful already with his
holdings in Burlington Northern and Amerada Hess," he said. "I
don't think he would be willing to take on Tenneco's problems
with Case (the farm equipment unit), which has been losing
about 180 mln dlrs annually and is worth less than a billion
dlrs on the market today."
 Reuter
