Posted on 09/08/2001 3:15:24 AM PDT by t-shirt
Chevron-Texaco Merger Approved
Chevron Gets Approval From Feds For Merger With Texaco
$39 Billion Deal Creates Nation's Second Largest Oil Co.
New Comapny Will Be Named ChevronTexaco Corp. WASHINGTON, Sept. 7, 2001
(AP) Oil giant Chevron Corp. received the go-ahead from federal regulators Friday to proceed with its $39 billion acquisition of fellow industry titan Texaco Inc. to create the nation's second-largest oil company.
The Federal Trade Commission voted 4-0 to approve the merger. Chairman Timothy J. Muris recused himself from the vote.
San Francisco-based Chevron agreed to buy Texaco in October 2000 in a stock deal valued about $39.3 billion, plus the assumption of about $6 billion in debt. Under the terms of the deal, Chevron will be renamed ChevronTexaco Corp. and will trade on the New York Stock Exchange under the new ticker symbol CVX.
Now-No. 3 Chevron had $48 billion in revenue last year. The No. 2 White Plains, N.Y.-based Texaco posted revenue of $51 billion last year.
In trading Friday, shares of Chevron were at $92.50, up 75 cents on the New York Stock Exchange, where shares of Texaco were up 91 cents to $71.01.
The combined company will still lag far behind the so-called "super" majors - Exxon Mobil Corp., Royal Dutch/Shell Group and BP PLC, which have muscled up through huge mergers in recent years.
The deal requires a number of significant divestitures. European regulators have already granted approval.
The companies announced in a statement they have also negotiated a consent decree with the attorneys general of 12 states.
"Today marks a critically important milestone as we move to establish a premier energy company with the world-class assets, talent, financial strength and technology to achieve superior results," said Chevron chairman and CEO David J. O'Reilly, who will lead the new company in the same capacity.
Texaco chairman and CEO Glenn F. Tilton said the companies will comply with all the conditions of the consent order with the FTC. Tilton, along with Richard H. Matzke, vice chairman of Chevron, will serve as vice chairman of ChevronTexaco.
Chevron plans to take control of Texaco Oct. 9, the same day the two companies' shareholders are to vote on the deal.
Holders of Texaco stock will receive 0.77 shares of ChevronTexaco for each share of Texaco they own.
To satisfy the FTC's concerns that the merger, as originally proposed, would violate antitrust law, Texaco agreed to divest its U.S. refining and marketing affiliates. Texaco refines crude oil in the United States under two separate affiliates, Equilon Enterprises and Motiva Enterprises. The company owns a 44 percent interest in Equilon, with the rest belonging to Shell Oil Co. Texaco and Saudi Refining Co. each own 35 percent of Motiva; the rest is owned by Shell.
Texaco also will sell its one-third interest the Discovery natural gas pipeline system in the Gulf of Mexico and its general aviation businesses in 14 states, the FTC said.
"In markets where competitive concerns were identified, those problems have been addressed, with the result being a continuation of the competitive balance that existed in the pre-merger environment," said Sean Royall, the FTC Bureau of Competition Deputy Director.
Analysts regard the two companies as a good fit because they have many complementary operations internationally, including West Africa and Brazil, home to some of the world's largest new oil fields.
Although rivals, the two companies have a long business relationship. For the past 65 years, they have co-owned a joint venture called Caltex Corp., which sells 1.8 million barrels of crude oil and petroleum products per day and operates in 55 countries.
Chevron tried to buy Texaco in 1999, but those talks unraveled over disagreements about price and issues of control.
When Chevron's then-CEO, the often acerbic Kenneth Derr, retired at the end of 1999, David O'Reilly took over, paving the way to reopen talks with Texaco. Texaco's stock also had been lackluster since breaking off its talks with Chevron.
It seems that the model nation for them is Zaire, where the ruling elite drive Mercedes Benz, fly to London to get connections to another African countries, talk to their kids at elite universities on their cell phones while the people around them can't even get diesel oil to power their electricity generators.
And we've gotta approve those mergers in order to compete with the European globalists.
Unfortunately, the latter is the process we are seeing in a lot of these mergers. These mega corporations are past the point of realizing more efficiency with scale, but are used to accumulate assets and control over government policies.
Like Tyson, Archers Daniels Midland, Cargill, etc.
It's because ownership of land in this country allows more than one person or company to own undivided interests in the same parcel. Oil companies have to become partners with a competitor in order to jointly drill and produce a property.
Each company has its own set of experts to make decisions on how the property should be operated. At some point, it dawns on one of the executives that they can buy or merge with the other company and fire its employees. They then own all of the property and don't have double the expenses that were occurring before.
This merger won't be the last. New oil companies are starting up all the time. Eventually they will grow into the size where they either acquire someone else, or end up acquired.
Others will soon do the same. Phillips, Unocal, and many others will follow. It's actually a necessary evolution, especially as oil exploration moves into very expensive and high-tech areas like waters over a mile deep. Single projects can cost well over a billion dollars, and only an industry giant has the capital to risk that.
Of course the oil companies are going to be "big"...do you want mom-and-pop outfits trying to handle the massive complexities of refining and distributing petroleum?
I beg to differ.
My Texaco stock will rise....as will all the portfolios of those who hold it (and Chevron)
For those interested, a review of history of the 'terrible' Standard Oil Trust will find that oil prices dropped with it's formation and rose again after the breakup.
You government at work
Economic efficiency is always in the best interest of the country and its citizens.
It's no fun to be the victim of one of these mergers as a worker. I know, because I'm one of them. But it allows companies to survive and to find oil, convert it to gasoline, and bring it to your neighborhood at a price that is remarkably low.
I know it won't stop your complaining, but you have nothing to complain about.
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