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ARCO still in limbo over BP acquisition; companies ready to “go the distance” for deal
Kay Cashman PNA Editor-in-Chief
BP Amoco Plc and Atlantic Richfield Co. are prepared to defend their proposed merger in court, ARCO’s chairman and chief executive said Jan. 19: “Clearly, we are ready to go the distance,” Mike Bowlin said in a statement. He did not elaborate on what the companies were prepared to do.
On Jan. 14, BP Amoco and ARCO decided to force the Federal Trade Commission’s hand, triggering a 20-day regulatory deadline the following day that compels the FTC to decide whether to approve BP Amoco’s $26.8 billion takeover of ARCO, or block it in court.
Bowlin said the companies were still negotiating with the FTC, hoping to avoid litigation.
Tom Koch, a BP spokesman in New York, said that during the 20-day period “we’ll start taking steps to close this deal until we’re told otherwise.”
The FTC can stop the countdown by obtaining a temporary injunction in federal court. The agency has not publicly stated its plans, but Koch said BP expects the FTC to make a legal challenge.
While the FTC commissioners have not yet voted on whether to challenge the merger in court, it is generally the practice of the FTC to stop settlement negotiations and prepare for a court case once merger partners trigger the 20-day clock.
If a federal judge grants a preliminary injunction, it could take months for witnesses to be gathered and for evidence to be collected. The prospect of a long legal battle has prompted many a pairing to abandon merger plans soon after the process began, and in recent years under Chairman Robert Pitofsky, the FTC has won most of its challenges.
FTC opposition political, says Stevens The FTC is reportedly opposed to the deal largely because it believes a combined BP-ARCO would have too much clout in the California gasoline market. The company would control 70 percent of Alaska oil production and 30 percent of gasoline retailing in California, the nation’s largest market.
BP Amoco officials say they think they’ve made enough concessions to maintain competition, including divestiture of some of the North Slope holdings.
“We’ve reached agreement with the state of Alaska, we’ve reached an agreement with the governor of California, we’ve had approval by the shareholders of both corporations,” Koch said.
Sen. Ted Stevens, R-Alaska, said in Washington that conversations with Chairman Robert Pitofsky suggest to him that the FTC’s position is not based on competitive concerns.
“It’s not a reasoned position coming from the agency delegated the authority to regulate mergers on the basis of antitrust considerations,” said Stevens, who supports the BP-ARCO deal. “They’re not talking antitrust, they’re talking politics... They’re just clearly saying they cannot approve the merger because it might have an impact on California.”
The Jan. 10 edition of Octane Week quoted Ron Gold of Petroleum Industry Research Associates as saying, “If BP Amoco is bold enough to proceed with a merger and fight it out in court, the company could be looking over its shoulder for years. If the court decides against BP Amoco years from now, the companies could have to unravel the whole thing.”
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