Report: Chevron to Buy Texaco

ByABC News
October 15, 2000, 7:07 PM

S A N  F R A N C I S C O, Oct. 15 -- Chevron Corp. reportedly has reached a deal to acquire Texaco Inc. for about $35.1 billion, creating the worlds fourth-largest oil company.

The boards of both companies approved the transaction, The WallStreet Journal reported today, citing sources familiar with thematter. A formal announcement was expected Monday.

Chevron spokeswoman Bonnie Chaikind refused to comment on thereport Sunday. Calls to Texaco were not answered; the company onFriday had refused to comment on reports of a deal.

According to the Journal, the combined company will be calledChevron Texaco, and Chevrons top executive David OReilly will bechairman and chief executive officer of the new company, whileTexaco CEO Peter Bijur will be vice chairman.

Under terms of the deal, Chevron will pay roughly 0.77 a share,worth $64.87 based on Fridays closing price, for each share ofTexaco. Chevron also will assume $7.5 billion of Texacos debt, theJournal reported.

The deal could require the companies to sell possibly thousandsof gas stations in order to resolve regulatory issues, the Journalreported.

Among U.S. oil companies, Chevron currently is the third largestand Texaco is the second largest. A merger would put them among theranks of other industry powerhouses formed by similar mergers,including Exxon Mobil Corp., Royal Dutch/Shell Group and BP AmocoPlc.

$1 Billion in Projected Savings

By combining forces, Chevron and Texaco could create as much as$1 billion in operational savings and would become more competitivein developing new oil and gas fields, The New York Times reportedSunday, citing executives familiar with the talks.

The deal would close the gap between the combined company andthe largest U.S. oil company, Exxon Mobil Corp., which had 1999sales of $160.9 billion. Chevron had 1999 sales of $31.5 billion,while Texaco had sales of $35 billion last year.

A proposed $37.5 billion deal between Chevron and Texacounraveled last summer after Texaco basically rejected all aspectsof Chevrons offer. At the time, Texaco was seeking an offer in thearea of $80 a share, while Chevron had offered around $70.