Tuesday December 1, 6:08 pm Eastern Time
Company Press Release
SOURCE: Kline & Company, Inc.
Proposed Exxon-Mobil Merger: Could Create a
Lubricants Powerhouse!
LITTLE FALLS, N.J., Dec. 1 /PRNewswire/ -- If the widely discussed merger between Exxon Corporation and Mobil
Corporation includes its lubricants businesses, a lubricants and specialty products powerhouse could be created. ''Exxon is one
of the largest worldwide lubricants basestock suppliers,'' notes William R. Downey, Jr., business manager of the Petroleum
Products Practice at Kline & Company, Inc., a Little Falls, NJ-based management consulting firm. ''Mobil brings to the table a
leading global finished lubricants position and a strongly recognized brand in the industrial, consumer, and commercial
automotive businesses worldwide.''
At this stage in discussions, the businesses at the focus of potential merger talks are unclear. It is unlikely, in Kline &
Company's opinion, that the transaction will be driven by lubricant and specialty product issues. For major integrated oil
companies, lubricants and specialty products usually make up less than 5% of their revenues, as it does in the cases of both
Exxon and Mobil.
''We see this as a continuation of a consolidation trend in the lubricants and specialties business,'' notes Geeta Agashe, project
manager of the Petroleum Products Practice. ''Pennzoil and Quaker State, two major lubricant manufacturers focused on
North America, are in the process of completing their merger. BP and Mobil are now operating as one in Europe under the
Mobil brand and there have been several smaller lubricant-driven transactions around the world.''
Why should executives of major integrated oil companies be interested in the lubricant specialty products businesses?
''Although these businesses make up a small amount of revenue, per-barrel margins are much higher than that for virtually any
other product category produced by integrated refiners,'' notes Downey.
Kline & Company's definition of specialty products includes petroleum lubricant basestock, which is the main raw material in
the building block for finished lubricants. Finished lubricants are also included in the definition of specialty products and are
used in automotive and industrial applications to lubricate, cool, and protect cars, trucks, and machinery. Also included in Kline
& Company's definition of specialty products are petroleum waxes, petrolatum, and other specialty products, including
performance fluids and solvents. Established in 1959, Kline & Company is an international business consulting firm offering a
broad range of services to the petroleum, chemical, and allied industries. Kline & Company is regarded as the worldwide
authority on the finished lubricants and basestocks business. For more information concerning Kline & Company's proprietary
expertise and syndicated studies related to lubricants, waxes, and other specialty products, please contact William R. Downey,
Jr. via telephone at 973-435-3388, via fax at 973-435-6291, or via e-mail to bill_downey@klinegroup.com.
SOURCE: Kline & Company, Inc. |
