Tesoro adopted poison pill after deal rejected: CEO

By Erwin Seba

HOUSTON (Reuters) - Independent western U.S. refiner Tesoro Corp's (TSO.N: Quote, Profile, Research, Stock Buzz) board of directors adopted a poison pill after investor Kirk Kerkorian's Trancida Corp rejected a deal that would have limited Tracinda's percentage of Tesoro's shares, said Tesoro Chairman and Chief Executive Bruce Smith.

A Tracinda spokesman declined to discuss Smith's comments.

Tracinda withdrew its tender offer last week after the poison pill was adopted. The poison pill required a friendly agreement be negotiated with Tesoro's board before any shareholder could increase its ownership beyond 20 percent.

"We offered him the opportunity to acquire 20 percent without the pill in place, but with an agreement that he would stand still at that level and offered him a board seat," Smith said during a Wednesday conference call. "He declined that."

Advisers to Tesoro's board recommended the directors adopt the poison pill in part because the directors do not have staggered terms or different classifications, he said.

Staggered terms and classified boards limit the ability of a potential acquirer to take over a company.

"Given the fact that we do not have a classified board, we could not allow somebody to acquire more than 20 percent without sharing that premium with all shareholders if someone were truly going to gain control of the company," Smith said.

"It was a decision not against Tracinda, not against somebody who wanted to acquire control, it was really driven by making sure all shareholders had benefit of change of control," he said.