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Exclusive: Poison Pill to Prevent ‘Creeping Takeover’

Tracinda Corp., the investment arm of billionaire Kirk Kerkorian, on Tuesday withdrew its tender offer for oil refiner Tesoro (TSO), expressing concern over the company's recent adoption of a "poison pill" stockholder rights plan.

The move was “surprising,” Tesoro CEO Bruce Smith said in an exclusive "Fast Money" interview.

When Kerkorian expressed an interest in owning 20% of Tesoro, a plan was designed to make sure that if Kerkorian -- or any other investor -- decided to raise their stake to over 20%, they would have to negotiate a friendly deal with every TSO shareholder, Smith said. That way, the company would be able to prevent a “creeping takeover.”

But that move by Tesoro, known as a “poison pill” shareholders rights plan, was enough for Kerkorian to pull his investment.

Was it really the pill, or did Kerkorian just want a way out? The debate escalated as Karen Finerman and Pete Najarian pointedly disagreed with each other on Kerkorian’s motives.

Karen called the rescinded offer a “weasly maneuver” on the part of Kerkorian. He clearly thought he paid too much for his stake and used the poison pill as an excuse for bailing on his investment, she said.

But the pill provision was not always in place, Pete countered. Tesoro added it only after Kerkorian expressed interest in the company, so it is not unexpected that he found it prohibitive to his ambitions as an activist investor.

Energy Prices

Smith also spoke to Fast Money exclusively about energy prices, saying the fundamentals support a lower price for crude oil, but it probably won’t go down until there is a worldwide shift in demand. “I think we are where we are for a while,” he said.

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Trader disclosure: On Nov. 27, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (ATVI), (YHOO), (EMC), (INTC): Najarian Owns (AMZN) Options, (EMC) Options, (YHOO) Options; Finerman's Firm And Finerman Own (GS); Finerman's Firm Owns (NYX), (TSO), (YHOO), (WMT), (AEO); Finerman's Firm Owns (MSFT) Options, (NMX) Options, (BIIB) Options; Finerman's Firm Owns SPX Index Puts; Finerman's Firm Is Short (SPY), (IYR), (IJR), (MDY),(IWM), (LEN); Finerman's Firm Is Short (LEH) And Owns (LEH) Puts; NBC Universal Is The Parent Company of CNBC

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