Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Microcap & Penny Stocks : Tokyo Joe's Cafe / Societe Anonyme/No Pennies -- Ignore unavailable to you. Want to Upgrade?

To: TokyoMex who wrote (1844)	8/17/1998 5:26:00 AM
From: TokyoMex	Read Replies (1) \| Respond to of 119973

DD will pop.. DuPont May Be Seeking Sale of Conoco By DAVID CAY JOHNSTON DuPont Co., which in May announced plans to sell the public 20 percent of its Conoco Inc. oil subsidiary, may now be looking to sell all of Conoco. DuPont declined to comment on a report Sunday in a London newspaper that the French oil company Elf Aquitaine wants to buy Conoco for $24 billion, but analysts said a sale to Elf or another middle-sized petroleum company would make strategic sense for DuPont. The article in the London newspaper, The Financial Mail, which said Elf was preparing an offer that would include swapping some assets with DuPont, said other oil companies were also looking at Conoco, the ninth-largest oil company in the United States. The report, citing an unidentified industry official, did not name any other potential bidders. The report comes less than a week after British Petroleum PLC said it would buy Amoco for $48.2 billion in stock and cash, setting off speculation that more middle-sized oil companies may merge so they can hold down costs in an era of cheap oil and compete with the biggest of the oil giants, Exxon and Royal Dutch/Shell. British Petroleum acquired Standard of Ohio in 1987. Catherine Durand, an Elf Aquitaine spokeswoman reached at her home in Paris, said the company would not comment on "stock exchange speculation." Susan Gaffney, a DuPont spokeswoman, said the company would not comment on the report. But nothing in DuPont's planned initial public offering of Conoco shares would preclude an outright sale of the company, she said. In May, DuPont announced that it would make an initial public offering for 20 percent of Conoco as part of its strategy to rely less on its cyclical petrochemicals business. Instead, DuPont wants to concentrate more on development of genetically engineered products to generate future growth and existing products, such as specialty chemicals, that it believes are less subject to wide swings in demand and price. DuPont, which has been expected to hold a so-called road show for potential Conoco investors next month, said in May the IPO was a step toward divesting itself of Conoco. Conoco was acquired in 1981 to ensure DuPont a steady supply of oil as a feed stock for its chemicals business in an era of rapidly rising oil prices and high inflation. Now, with oil selling at a fraction of the inflation-adjusted price in 1981 and exploration of offshore fields requiring massive capital investments, owning an oil company is no longer attractive to DuPont. If it sold all or part of Conoco, whether for cash outright or through a public offering, DuPont would be liable for billions of dollars in capital gains taxes. So an offer that allows for a tax-free exchange of assets -- as Elf is reportedly proposing -- would be especially attractive, said Theodore Semegran, an analyst with Brown Brothers Harriman. Elf is the majority owner of Sanofi, a large French pharmaceutical company, and it makes perfumes under such brand names as Oscar de la Renta and Fendi. If these or other assets were swapped for part of Conoco, the deal could be structured to reduce DuPont's capital gains taxes. "They have to make a decision about whether they will get a greater total return by starting with an IPO and then spinning Conoco off or by selling it outright," Semegran said. "An offer that would help them avoid some fairly significant capital gains taxes would be attractive." He said Conoco was worth between $22 billion and $23 billion, slightly less than the price Elf is reportedly willing to pay. Conoco has developed large tracts of oil in the North Sea and Indonesia, and recently off the west coast of Africa. Conoco also has large refineries and a chain of retail gas stations in the United States. In early 1995 the company tried to arrange a deal to develop two oil fields in Iran. But that deal fell apart because of opposition by the Bronfman family, which at the time held the controlling stake in DuPont, but it has since sold its stake and invested in MCA, the Hollywood entertainment company. Elf also has fields in the North Sea which, if combined with Conoco's, could allow for lower-cost operations there. Monday, August 17, 1998 Copyright 1998 The New York Times