British Petroleum buying Amoco for $48 billion in stock

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British Petroleum buying Amoco for $48 billion in stock British Petroleum buying Amoco for $48 billion in stock

By CLIFF EDWARDS - Associated Press Writer
Date: 08/11/98 09:00

CHICAGO -- British Petroleum PLC is buying Amoco Corp., the fifth-largest U.S. oil company, for $48 billion in stock in what would be the largest industrial merger in history.

The combined company would be called BP Amoco PLC, but in the United States, BP gasoline stations would be renamed Amoco.

The deal, announced today, ranks as the fifth largest ever and surpasses the $36 billion purchase of Chrysler Corp. by Germany's Daimler Benz announced in May as the biggest industrial marriage.

Amoco is already the biggest producer of natural gas in North America and combined with British Petroleum's production in Alaska the company would be the biggest producer of oil and gas in the United States.

BP is already the world's third largest oil company and the deal would make it a bigger rival to No. 1 Royal Dutch/Shell and Exxon Corp., the world's second biggest oil company.

Based on last year's numbers, the new BP Amoco would have annual revenues of $108 billion.

BP chief executive Sir John Browne would head the new group. Its board would be co-chaired by BP chairman Peter Sutherland and Amoco chairman Larry Fuller.

Amoco's office in Chicago would be headquarters for the group's North American refining, marketing and transportation business and its worldwide chemicals business.

The BP Amoco group would have combined oil and gas reserves equivalent to about 14.8 billion barrels, and daily production of some 3 million barrels.

The companies expect to reduce jobs in overlapping areas, but did not disclose a number of planned cuts. The companies said cost savings from the deal would add $2 billion to annual profits by the end of 2000.

Investors pushed BP and Amoco shares sharply higher in response to the deal. BP's New York-listed shares rose 13 percent, or $9.933/4 to $85.933/4. Amoco's stock was up $10.25 or 25 percent to $51.25 on the New York Stock Exchange.

Amoco has been struggling recently to refocus its growth overseas, a belated effort to catch up with other American oil companies that have moved away from the maturing U.S. marketplace.

The Chicago-based company last year sold about one-third of its domestic oil and natural gas properties. For the first six months of this year, Amoco's profits fell nearly by half to $673 million.

U.S. oil company stocks have been battered this year because of overproduction by world oil producers and falling demand from important Southeast Asian countries. Amoco's stock, which was split earlier this year, is down 12 percent over a year ago.