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Gold/Mining/Energy : Texaco (TX) -- Ignore unavailable to you. Want to Upgrade?

To: hoopsville who wrote (106)	5/9/1999 10:29:00 AM
From: Worswick	Read Replies (1) \| Respond to of 143

Texaco eyes £80bn merger with Chevron TEXACO is eyeing its rival Chevron for a huge oil merger worth up to $125 billion (£80 billion). Chevron is believed to be open to discussions on a merger with Texaco after talks with Arco were scuppered earlier this year. Industry executives revealed last week that despite Chevron's refusal to admit it was looking for a merger, it did make a behind-the-scenes approach to Arco at the same time that BP Amoco was sealing its takeover of the company. The move by Texaco, the smaller of the two oil groups, could lead to the third big merger in the industry in less than a year and shoot the combined group up the oil-company league table. Texaco is currently valued at $34 billion and Chevron at $64 billion. Observers suggest that any deal would involve a premium of between 20% and 25%, resulting in an overall value of up to $125 billion. This would mean that Texaco could leap up the oil league into third spot after BP Amoco. Shell would still head the table, with a value of more than $200 billion. But all three will be knocked down a place when Exxon and Mobil complete their merger, the world's biggest to date, creating a company worth about $220 billion. The move comes as Texaco seeks to strengthen its position in the market. The group has made the initial approach, claim analysts, in an effort to ensure that its senior board members can maintain a strong representation on a combined board despite leading the smaller group. A spokesman for Texaco would not comment directly on the prospect of a deal. He said: "The fact is that Texaco does look at ways of growing and increasing shareholder value." One insider suggested a merger with Chevron, which would not comment, would be beneficial to Texaco shareholders, as a deal would deliver a hefty premium. He said: "We simply cannot deny that the thought of a merger with Chevron has crossed our minds." Peter Bijur, chairman of Texaco, highlighted the company's readiness for such a deal last month. He said: "For us, the compelling drivers for any merger are an increase in cash flow generated by the deal, the overall economics of the combination and the business 'fit' of such a merger." Observers believe the two groups could benefit from synergies around the world, but in America there would have to be disposals to ensure the deal complies with anti-trust laws. Both companies have a strong downstream presence on the west coast. Once combined, it would almost certainly be deemed as too dominant by the authorities. Texaco's joint venture in petrol stations with Shell would probably result in Shell being given the opportunity of buying the west coast operation outright, leaving a merged group with just Chevron's stations. Chevron would, however, benefit from Texaco's downstream presence in Europe and Latin America, where it is scarcely represented at the moment. From the upstream point of view, there appear to be few difficulties in getting a deal through the regulators. This would provide opportunities to cut costs where there is an overlap - in the Asia-Pacific region and the Middle East, for example. One Wall Street analyst said: "Texaco certainly has to do something and this does not surprise. "For Texaco to be a big player, it needs a merger and despite some problems, Chevron could work for it." Texaco and Chevron are well known to each other. They operate a number of joint ventures together, the most signifcant being Caltex. Formed in 1936 as a 50-50 joint venture between the two groups, Caltex is a leading producer in many of the 60 countries in which it operates. It has refining capacity of 860,000 barrels a day and runs 8,000 petrol stations. From the Sunday Times 5.9.99 For Private Use Only

To: hoopsville who wrote (106)	5/10/1999 10:08:00 AM
From: hoopsville	Read Replies (1) \| Respond to of 143

Texaco stock price falling this morning. Street must think Texaco acquisition by Chevron has major problems.