Texaco cancels merger talks with Chevron, says offer unacceptable

by The Associated Press

Texaco Inc. called off talks aimed at a buyout by Chevron Corp. June 2, ending weeks of speculation over a deal between the two big oil companies.

Texaco said Chevron’s proposal was “unacceptable for several reasons, including complexity, feasibility, risk and price.”

Chevron had tried to buy Atlantic Richfield Co. earlier this year, but lost out to BP Amoco, which agreed in March to buy ARCO for $26.8 billion.

Oil companies have been rushing to merge this year as a way to preserve profits in an era of historically low oil prices. Although prices have risen in recent weeks.

Chevron reportedly was considering bidding $42 billion, or $80 a share, for Texaco, in a deal that would link the nation’s third- and fourth- largest energy companies.

But the combination faced several, obviously insurmountable, obstacles. Texaco already has an alliance with Shell, the U.S. subsidiary of Royal Dutch/Shell Group. Texaco and Chevron also have overlapping operations on the West Coast. And there were also issues of control, namely that Chevron chairman and chief executive Kenneth T. Derr wanted it, and Texaco chairman and chief executive Peter Bijur was apparently unwilling to cede it.