Not to worry about $1 billion divestiture, Phillips says

Company will sell overlapping convenience, gasoline and other retail operations once Tosco acquisition as regulatory approval

by The Associated Press

How many Circle K convenience stores, Phillips 66 outlets and other retail operations must be sold and which ones have yet to be determined, Phillips Petroleum Co. says.

But that the Bartlesville, Okla.-based refinery and marketer must divest itself of $1 billion in assets has been a part of the deal from the outset of Phillips’ plan to acquire Stamford, Conn.-based Tosco Corp., a Phillips spokeswoman told The Arizona Republic for a July 4 report.

The deal is pending regulatory approval. The divestiture is to follow.

“Where we have overlap and where the market warrants, we’ll have a sale,” company spokeswoman Kristi DesJarlais said this week. “We’re talking about Circle K, Phillips 66, any of the brands that will be under the Phillips umbrella.”

Concern that all 6,400 Tosco-owned Circle K stores were to be sold grew out of a report on the web site of Financial Times, a British business newspaper, and was heightened by Tosco’s announcement in late June that it was laying of 200 people.

Most of those layoffs were in Tosco’s Tempe-based marketing center.

DesJarlais said no further layoffs there are contemplated and that Phillips still expects to add employees there in a combined retail, marketing and transportation division after the acquisition

“Ever since the deal was announced, we said we would be selling $1 billion worth of assets,” she said. “Nothing has changed.”

However, there was no mention of that aspect in material on the Phillips web site or in a number of other reports The Associated Press checked.

DesJarlais said it was discussed in a Feb. 5 conference call with analysts and news media representatives.

Phillips Chairman and CEO Jim Mulva had said recently that Phillips would make a selective divestiture but that it wouldn’t be selling any refinery capacity. That comment during an energy conference in New York apparently gave rise to the current concern.

The acquisition will produce one of the largest petroleum refining and marketing organizations in the nation, including about 12,000 retail gasoline outlets.

Tosco bought the Phoenix-based Circle K Corp. five years ago.