IN THE NEWS / Another Mega-Merger??? Shell Takeover of Chevron Rumored
By KIM CURTIS
Associated Press
SAN FRANCISCO (AP) -- Chevron Corp. (NYSE:CHV - news)'s stock rose nearly 5 percent Wednesday on rumors that the company would be acquired by Royal Dutch-Shell, but analysts downplayed the possibility of a deal.
Speculation about a merger first appeared Monday in a report by a little-known Dutch stock-tracking Web site, which was later circulated among Chevron workers at their San Francisco headquarters.
The Dutch Stock Page, which charges $100 a month for its tip service, said Royal Dutch-Shell plans to acquire Chevron for $65 billion.
Speculation about a possible deal led Chevron's stock higher on the New York Stock Exchange, where the company's shares gained $3.75, or 4.5 percent, to end at $86.18 3/4.
Chevron spokeswoman Nancy Malinowski said the company does not comment on ''speculation or rumors about business matters that may or may not be under consideration.'' Shell has the same policy, according to spokesman Eric Nickson.
If the proposed deal is approved, Shell, one of the world's leading oil companies with 1997 sales of $129 billion, would pay about $100 per share to buy Chevron, the world's seventh-largest oil company with $35 billion in sales last year, the service reported.
Brian Eisenbarth, a stock analyst with Collins & Co. in San Francisco, noted that the oil industry is already undergoing consolidation, most notably with Exxon Corp. (NYSE:XON)'s announcement last week that it would buy Mobil Corp. (NYSE:MOB) for $78 billion.
The Web site reported that the Chevron deal was to be unveiled at a Dec. 14 analyst meeting in London. But Eisenbarth said he's never heard of a merger announced at a meeting of analysts. He questioned the credibility of the report's source and speculated whether it was a publicity stunt to boost readership at the Web site.
''If it's announced, then everyone will be blown away, but I'm kind of leaning the other way,'' he said.
Such a deal would be complicated to put together because Royal Dutch-Shell is a holding company owned 60 percent by Netherlands based Royal Dutch and 40 percent by London-based Shell. In a stock swap, Chevron shareholders would have to accept some Royal Dutch shares and some Shell shares.
A cash transaction would be simpler, but Shell might not want to borrow the $65 billion it would need, Eisenbarth said.
A marriage with another big oil company would likely result in thousands of layoffs as the combined business tried to eliminate overlapping operations and increase profits.
Chevron employs 34,000 people worldwide and 8,300 in the San Francisco Bay area.
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