The addition of Unocal's 1,100 stations to the 286 Circle Ks that it already operates in California will thus raise Tosco's statewide market share to 19% in gasoline retail sales. Top-ranked Arco and Chevron both have market shares of more than 20% statewide.
Formerly an obscure oil shale refiner based in Santa Monica, Tosco moved to Stamford, Conn. in 1990. Weighed down by losses, the company put itself up for sale in the late 1980s and found no takers.
But under chief executive Thomas D. O'Malley, the company has prospered since 1990 and is a Wall Street star, earning twice the profits of other oil refiners, said industry analyst Hervey.
Investors heartily approved of the deal. After Monday's announcement, Tosco's shares soared $12.375 to close at $72.50 on the New York Stock Exchange. Unocal rose $1 to $40.50.
For the nine months ended Sept. 30, Tosco reported a profit of $116 million on revenue of $7.2 billion.
With a total payroll of 3,100 employees, 76 Products represents about one-quarter of Unocal's total payroll. The unit's 1995 revenue of $4.04 billion was about half of Unocal's for the year.
El Segundo-based Unocal will take the cash from the 76 Products sale and invest in expansion of its huge natural gas project in Thailand, which is expected to produce close to a 1 billion cubic feet of gas per day in 1997, a spokesman said. The company also plans major expansion at projects in Indonesia, Azerbaijan and Myanmar.
Tosco will pay Unocal $1.4 billion for 76 Products fixed assets, which include the three refineries, gas stations and transportation assets, including terminals, tankers and pipelines. Tosco will also pay $400 million for inventories.
In addition, Unocal will receive up to $250 million over a seven-year period in possible participation payments should gas profit margins exceed certain agreed-to levels.
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Unocal 76 Products Co. at a Glance
* Background: Formed into a separate subsidiary by parent firm Unocal in 1994; consists of the firm's gasoline production and sales operations
* Headquarters: Costa Mesa
* President: Lawrence M. Higby
* Employees: 850
* Purchaser: Tosco Corp. of Stamford, Conn., independent oil refiner and owner of Circle K convenience stores
* Sale price: $2 billion
* Sale includes: About 1,350 76-brand gasoline stations, 1,100 of them company-controlled; refineries in San Francisco, Santa Maria and Los Angeles; various terminals, bulk plants and pipelines; lubricants business; commercial and industrial petroleum products business; three oceangoing tankers and credit card systems
Source: Unocal, Times reports; Researched by JANICE L. JONES / Los Angeles Times
Los Angeles Times