Exxon, Mobil shareholders approve merger; regulators to decide by October

New company will be called Exxon Mobil Corp. and have headquarters in Irving, Texas, Exxon’s current home; loss of 9,000 jobs expected worldwide

David Koenig

Associated Press Writer

Only regulatory approval now stands between Exxon and Mobil and their history-making $82.2 billion merger, but analysts said consumers shouldn’t worry about a possible increase at the gas pumps if that occurs.

The combined company “can’t exert undue influence on the retail market because most of the major oil companies don’t own their own retail stations — they’re owned by individuals,” said Keith Petersen of Salomon Smith Barney in New York.

“The impact on consumers will be hardly noticeable,” agreed Michael L. Mayer of Schroder & Co. “Gasoline marketing in the U.S. is highly competitive.”

In separate meetings May 27, shareholders of each company overwhelmingly approved the marriage, which would produce one of the world’s largest companies with about $150 billion in combined 1998 revenue.

The new company would be called Exxon Mobil Corp. and have headquarters in Irving, Texas, Exxon’s current home. Mobil is based in Fairfax, Va.

Exxon’s chairman Lee R. Raymond said the combined company will be more cost-efficient — cutting costs by $2.8 billion — and better able to compete with international competitors, including state-run oil companies, than would either Exxon or Mobil alone.

Raymond, who would become chairman of the new company, acknowledged that federal regulators could force the sale of some gas stations where the two brands compete head to head.

But he said both nameplates — the Exxon tiger and Mobil’s red Pegasus — would be retained.

Decision expected in October

Independent analysts generally view the merger as benign for consumers, even though it would create the world’s largest energy company.

“We would expect that the regulators would look at this closely ... I haven’t seen anything yet that would cause a reason for concern,” said Bill Noble, an AAA spokesman.

According to the American Petroleum Institute, the new company would account for 12 percent of U.S. refining capacity and 7 percent worldwide.

The companies predicted that the merger will result in the loss of 9,000 jobs — 7 percent of their combined worldwide work force — but admitted that’s just an estimate.

“Even without mergers, there would be layoffs in this business,” said Mobil chairman Lucio Noto, who would become vice chairman of the combined company. “Costs have to come down, people have to get more efficient.”

Shareholders agreed. More than 99 percent of the shares in Exxon were voted in favor of the marriage, as were more than 98 percent of Mobil shares.

Exxon Mobil will have about 48,500 gas stations around the world, with roughly a third in the United States, plus exploration and production operations worldwide. On a daily basis, the companies together produce 2.5 million barrels of oil and equivalent amounts of natural gas — more than the country of Kuwait.

Among Exxon’s holdings are a 22 percent stake in Alaska’s Prudhoe Bay oil field, the nation’s largest field, and 20 percent of the trans-Alaska oil pipeline system. It also owns 42.5 percent of the natural gas at Prudhoe, along with significant shares of the Endicott, Point McIntyre and Lisburne oil fields.

Mobil’s Alaska ownership is limited to small stakes at Prudhoe Bay and Kuparuk, the nation’s second largest field.

The two companies announced plans to merge in December. Exxon is the biggest U.S. oil company and Mobil is No. 2. The merger will create the sixth-largest oil producer in the world and the largest that is privately owned.

The combination is part of a consolidation trend in the oil industry, which most observers expect will continue. BP Amoco, itself the creation of a 1998 merger between British Petroleum and Amoco Corp., has agreed to buy Atlantic Richfield Co.