3 April 1999
BP Amoco Plc confirmed that, following a successful outcome to talks between the two companies, it has reached agreement to combine with the Atlantic Richfield Company (ARCO) of Los Angeles. The $26.8 billion all-stock deal has been approved by the boards of both companies.
The deal would create the largest private-sector oil producer in the world. It would give BP Amoco entry to the key West Coast retail markets of the US where ARCO has a leading market share in five states and owns two of the most efficient refineries in the region. With its refining and retail network BP Amoco already has east of the Rockies, this makes it a coast-to-coast marketer in the US.
BP Amoco is also the largest producer of Alaskan crude oil. ARCO would offer BP Amoco refining capacity for the Alaskan crude. BP Amoco and ARCO together would control the biggest share of the regional Alaska North Slope, or ANS, crude. The combined production would be about 800,000 barrels per day, which equals two thirds of Alaska's output. For that reason both Alaskan state officials and California oil traders expressed concerns that the merger puts too much power in the combined company's hands.
Approximately 2,000 jobs are expected to be lost as a consequence of cost saving cuts after merging of the two companies. The new company would have more than 100,000 employees.
The transaction has to be approved by antitrust regulators. BP Amoco said the acquisition probably would not be finalized until the end of the year. The main regulatory concern would be the grip the combined company would have on crude oil supply to refineries in California and along the West Coast.
The merger comes just three months after BP completed the purchase of Amoco for $55 billion. The deal would transform the former medium-sized British Petroleum to one of the major oil suppliers with a combined market capitalization of around $190 billion. Exxon, still awaiting regulatory approval for a merger with Mobil, would be the world's largest oil company with a value of about $240 billion. The third player would be the Royal Dutch/Shell Group, which is valued at about $180 billion.
More info: http://www.bpamoco.com/nmshome/
Source: BP Amoco