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Way Is Cleared for BP to Acquire Amoco

Energy: EU antitrust hurdles are cleared. BP's shareholders overwhelmingly approve the deal.

November 26, 1998|From Times Wire Services

BRUSSELS — British Petroleum Co. will receive European Union antitrust approval for its planned $63.8-billion purchase of Amoco Corp. in mid-December after offering to scale down the purchase, the European Commission said Wednesday.

BP shareholders meeting in London, meanwhile, voted overwhelming approval of the acquisition of Amoco, the fifth-largest U.S. oil company, that BP first announced in August.

In Brussels, European Competition Commissioner Karel Van Miert said, "It looks like we can indeed authorize the [combined] operation."

Asked about the changes the companies offered to win approval, Van Miert said he was not "able to be more specific."

Van Miert told Bloomberg News in a separate interview that the companies pledged to modify their fuel-additives business.

The deadline for an EU ruling was extended two weeks until Dec. 15 to give the commission, the EU's executive arm, time to assess the offer.

The deal would form a company big enough to challenge industry giants Exxon Corp. and Royal Dutch/Shell Group.

The new company, BP Amoco, would have annual sales of $112 billion. About $12.8 billion of that would come from chemicals, making BP Amoco the third-largest chemical company in terms of sales behind Royal Dutch/Shell and Germany's BASF, analysts said.

The vote by BP shareholders was a formality, but BP Chief Executive Sir John Browne welcomed it as major step, saying it kept the merger firmly on track for completion by year end.

The companies have identified at least $2 billion in annual pretax savings from the merger, which Browne said would help meet the challenges of the current climate, with oil prices at a 25-year low and a global economic downturn.

Browne will be chief executive of the new company, with BP Chairman Peter Sutherland and Amoco's Larry Fuller co-chairmen of a 22-member board.

The EU review of the purchase was interrupted last month when regulators asked BP and Amoco for more information on their fuel-additives business. The review resumed on Oct. 29 after the companies responded.

Another EU regulator said last month that the purchase could give BP an excessive share of some European markets for petrochemicals, those derived from oil. He said the British market, where BP is strongest, would be looked at in the most detail.

The commission can effectively veto transactions that result in or strengthen a dominant position in EU markets, even if the companies are from outside the 15-nation EU.

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