|
Government approves merger of Exxon and Mobil FTC requires downstream divestitures; combination creates world’s largest publicly traded oil company H. Josef Hebert Associated Press Writer
Exxon and Mobil have moved swiftly to conclude their $81 billion merger after federal regulators cleared the way — with conditions — for the deal creating the world’s largest publicly traded oil company.
The merger reunites two of the biggest remnants of the 1911 government breakup of John D. Rockefeller’s Standard Oil empire.
Company officials said Nov. 30, following U.S. Federal Trade Commission approval, that they would comply with government requirements that the new oil giant sell 2,431 of its nearly 16,000 gas stations, specifically those in the Northeastern United States, Texas and California, as well as a refinery and other assets.
FTC says settlement preserves competition “This settlement should preserve competition and protect consumers from inappropriate and anticompetitive price increases,” said FTC Chairman Robert Pitofsky.
“Exxon and Mobil have accepted terms and conditions specified by the FTC and will comply fully and in a timely manner,” Exxon Chairman Lee Raymond said in a statement only hours after the FTC gave its conditional approval to the deal, concluding a yearlong review.
Within minutes of the FTC action, executives of the two companies filed papers in New Jersey and Delaware, where Exxon and Mobil had been registered, officially creating the new Exxon-Mobil, a company producing 3.8 percent of the world’s oil with 120,000 employees and $138 billion in assets.
The New York Stock Exchange announced that beginning Dec. 1, the Exxon and Mobil symbols would be scrapped, and the new company would be traded under a new Exxon-Mobil symbol, XOM.
Without the conditions the FTC imposed, the agency said, the new company would violate antitrust laws and “significantly injure competition” in some parts of the country. So the commissioners voted 4-0 to approve a settlement requiring Exxon, the country’s largest oil company, and Mobil, the second largest, to sell off assets where they dominate markets.
Companies had regional retail dominance The FTC noted Exxon’s and Mobil’s retail market dominance in the mid-Atlantic and Northeast states, in Texas, and in California where in many areas they accounted for 20 percent to 35 percent of the retail gasoline markets. The agency also singled out concerns about refining operations in California and some shipping terminals in the Northeast.
As a result, the FTC required under a settlement agreement, also endorsed by 13 states, that:
• Exxon-Mobil within nine months sell 1,740 service station from Virginia to Maine. Exxon must jettison all its stations in the six New England states and New York, while Mobil must sell its stations in New Jersey, Pennsylvania, Delaware, Maryland, Virginia and Washington D.C.
• Exxon sell all 360 of its gas stations in California as well as a refinery at Benicia, Calif.
• Mobil sell 319 stations in Texas including those in Dallas, Houston, Austin, San Antonio and College Station.
• Mobil sell oil terminals in Boston and Washington D.C.
The new company also will have to dispose of some pipeline and other assets, including 12 stations in Guam.
No specific buyers were required, and in many cases gasoline will still be marketed with Mobil or Exxon brand names, officials said. FTC officials said they would monitor the sales to ensure the buyers will provide competition.
Although 13 states endorsed the agreement, Connecticut Attorney General Richard Blumenthal did not, saying the merger “may harm consumers, hamstring competition and threaten (gas station) dealers.”
Public Citizen, a consumer and environmental advocacy group, said the merger “is likely to lead to higher prices at the gas pumps” because of market dominance.
Effective worldwide competition company’s goal Company executives have defended the merger as a way to reduce costs and allow them to compete worldwide against the huge government-owned oil companies in Saudi Arabia, Mexico and Venezuela that are even larger than the combined Exxon-Mobil.
“The merger will allow Exxon-Mobil to compete more effectively,” said Raymond. Company officials have said the merger will eliminate 9,000 of the two companies’ 120,000 jobs.
The deal reflects a rush by the petroleum industry toward consolidation.
A year ago, British Petroleum completed its merger with Amoco, and BP Amoco’s proposed $29 billion purchase of Atlantic Richfield is nearing approval at the FTC, although some competitive issues involving the two companies’ Alaska holdings remained to be worked out. That deal would create the world’s second largest nongovernment oil company behind Exxon-Mobil.
Texaco Inc., and Shell have combined some refinery and marketing operations. Earlier this year, Chevron and Texaco talked of a marriage, but those discussions between the country’s third and fourth largest oil companies broke off over price.
The Justice Department was not involved in reviewing this merger.
| 