Nov. 27 (Bloomberg) -- Billionaire Kirk Kerkorian's Tracinda Corp. withdrew its $1.4 billion tender offer for 16 percent of Tesoro Corp., citing a stockholder-rights plan adopted by the oil refiner. Tesoro fell almost 6 percent in New York trading.

The rights plan ``inhibits value for all Tesoro shareholders by, among other things, restricting the ability of shareholders to vote, sell or acquire Tesoro shares freely without fear of triggering the draconian provisions of the rights plan,'' Tracinda said in a statement today.

Tesoro, based in San Antonio, adopted the rights plan to block potential acquirers from gaining control of the oil refiner without paying a premium for all of its shares, according to a Nov. 21 statement. The company said the so-called poison pill wouldn't be triggered by Tracinda's offer, which was announced on Oct. 26.

``If I'm a shareholder I'm mad as hell,'' said Fadel Gheit, an analyst at Oppenheimer & Co. in New York who rates Tesoro shares at ``neutral'' and owns none. ``Why can't you let the market decide what's best for shareholders?''

Tesoro fell $3.04, or 5.9 percent, to $48.65 in New York Stock Exchange composite trading, extending a 7.6 percent decline yesterday after Tracinda suggested it might withdraw its offer.

Tesoro credit default swaps fell 26 basis points to 149 basis points, according to CMA Datavision in New York. A decline in the price of credit default swaps, used to speculate on a company's ability to repay its debt or hedge against losses, signifies improved investor confidence in the credit.

Shareholder Value

Tracinda said it ``is disappointed that by adopting the rights plan Tesoro has elected to significantly impede the prospects for shareholder value creation.''

Tesoro, in a statement, said it was surprised by Tracinda's announcement.

``Tesoro has a long-standing value creation strategy in place focused on operational excellence initiatives, system synergies, organic growth opportunities and growth by acquisition which has increased stockholder value 70 percent over the past year and more than 200 percent over the past three years,'' the company said.

Tesoro on Nov. 21 said the rights plan wouldn't be imposed by Tracinda's tender offer, which would increase its stake to 19.98 percent, just below the threshold of 20 percent. Tesoro made no recommendation on whether shareholders should tender their stock.

Kerkorian, 90, made his fortune investing in movie studios, hotels, casinos and automakers. Forbes magazine ranks him as the seventh-richest American, with an estimated net worth of $18 billion.

His investments in Chrysler yielded a $2.7 billion profit when Daimler-Benz AG acquired the carmaker in 1998. Kerkorian's bid last year to force General Motors Corp. into an alliance with Renault SA and Nissan Motor Co. failed.

To contact the reporter on this story: Dan Lonkevich in New York at dlonkevich@bloomberg.net.

Last Updated: November 27, 2007 16:44 EST