- The Washington Times - Saturday, September 8, 2001


The Federal Trade Commission voted 4-0 yesterday to approve Chevron Corp.'s $39 billion acquisition of fellow oil titan Texaco Inc.
The only remaining barriers to the merger, which would create the second-largest oil company in the nation, is approval by shareholders and a hefty sale of assets that federal regulators made a condition of their approval. FTC Chairman Timothy J. Muris recused himself from the vote.
Chevron, based in San Francisco, said it would buy Texaco in October 2000 in a stock deal now valued at $39.3 billion, plus the assumption of some $6 billion in debt. Chevron would be renamed ChevronTexaco Corp. and trade on the New York Stock Exchange under the new ticker symbol CVX.
Holders of Texaco stock would receive 0.77 shares of ChevronTexaco for each share of Texaco they own.
Chevron shares closed yesterday up 65 cents to $92.40 on the NYSE, where shares of Texaco rose 58 cents to $70.68.
The company posted $48 billion in revenue last year. The No. 2 White Plains, N.Y.-based Texaco had revenue of $51 billion last year.
Still, the combined company would lag far behind the "super" majors ExxonMobil Corp., Royal Dutch/Shell Group and BP PLC, which have muscled up through huge mergers in recent years.
Chevron plans to take control of Texaco Oct. 9, the same day the two companies' shareholders are to vote on the deal. The FTC also will decide on that day, after receiving public comment, whether to make its merger approval final.
European regulators already have granted approval, and the companies announced in a statement they have negotiated a consent decree with the attorneys general of 12 states.
"Today marks a critically important milestone as we move to establish a premier energy company with the world-class assets, talent, financial strength and technology to achieve superior results," said Chevron Chairman and Chief Executive Officer David J. O'Reilly, who will lead the new company in the same capacity.
To satisfy the FTC's concerns that the merger, as originally proposed, would violate antitrust law, Texaco agreed to divest its U.S. refining and marketing affiliates. Texaco refines crude oil in the United States under two affiliates, Equilon Enterprises and Motiva Enterprises. The company owns a 44 percent interest in Equilon, with the rest belonging to Shell Oil Co. Texaco and Saudi Refining Co. each own 35 percent of Motiva; the rest is owned by Shell.
Texaco also will sell its one-third interest in the Discovery natural gas pipeline system in the Gulf of Mexico, a Texas plant, and its general aviation businesses in 14 states, the FTC said.

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