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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: Crimson Ghost who wrote (41094)	3/28/1999 7:54:00 PM
From: Crimson Ghost	Respond to of 95453

BP in talks to acquire ARCO. Wonder if this will fly now that oil has rallied. Top Financial News Sun, 28 Mar 1999, 7:46pm EST BP Amoco in Talks to Acquire Arco for US$25 Billion, Person Familiar Says BP Amoco in Talks to Buy Arco for $25 Bln, Person Says (Repeat) (Repeats to restore missing word in 2nd paragraph.) London, March 28 (Bloomberg) -- BP Amoco Plc, the world's third-largest publicly traded oil company, is in talks to acquire Atlantic Richfield Co. in a $25 billion stock transaction, a person familiar with the negotiations said. An announcement may come later this week after the boards meet, though the talks could still be derailed, the person said. Officials at BP Amoco couldn't be reached for comment, while Atlantic Richfield spokeswoman Linda Dozier declined to comment. The negotiations were first reported on the Financial Times and Wall Street Journal Internet sites today. Los Angeles-based Arco, the eighth-largest U.S. oil company, was seen as a takeover target since Exxon and Mobil said on Dec. 1 that they plan to merge into the world's biggest oil company. BP Amoco wants to match the size of Exxon-Mobil, and could save money by combining operations in Alaska, where Arco and BP Amoco are the largest oil producers, analysts said. ''BP Amoco and Arco share the Alaskan North Slope,'' said Fadel Gheit, an analyst with Fahnestock & Co. in New York. ''They could get huge cost savings and efficiencies there.'' BP Amoco produced 450,000 barrels of oil a day from Alaska last year, while Arco produced 317,000 barrels a day, company figures show. A $25 billion transaction would value Arco at $77.81 a share, a 19 percent to the company's closing price on Friday of 65 3/8. Arco has a market capitalization of $21 billion. West Coast Leader BP Amoco is the only oil company that could buy Arco without antitrust problems on the U.S. West Coast, where Arco is one of the leading sellers of gasoline, analysts said. ''Chevron, Texaco, and Royal Dutch couldn't touch Arco with a 10-foot pole,'' Gheit said. Arco has a 26-percent share of California's gasoline market, while Chevron Corp. has 22 percent and the Texaco-Shell alliance has 18 to 19 percent, Gheit said. BP Amoco was formed on Dec. 31 when London-based British Petroleum Co.'s $61.7 billion completed the buyout of Chicago's Amoco Corp., one of several combinations of large oil companies prompted by declines in the price of crude oil since October of 1997. Arco, which gets a larger share of its profits from oil sales than its largest U.S. rivals, has been hit hard by the decline in prices. The company had a fourth-quarter loss of $794 million, or $2.47 a share, the company's first unprofitable quarter in six years. The company took charges to write down assets and inventory because of low oil prices, and also for costs associated with cutting 1,200 jobs. Accelerated Firings BP Amoco said last month it will accelerate its cost-cutting plan and fire more workers after the prolonged slump in oil prices led to a 37 percent drop in fourth-quarter profit. The company said it plans to fire more than 6,000 workers because of the slump and as part of cost-cutting measures after the Amoco Corp. buyout. Stocks of both companies have risen along with oil prices after the Organization of Petroleum Exporting Countries pledged last week to reduce world supplies by 2.7 percent. Arco rose 1 5/16 to 65 3/8 Friday in New York trading, while BP Amoco rose 26 pence to 1037 in London. ©1999 Bloomberg L.P. All rights reserved. Terms of Service and Trademarks.