Exxon, Mobil Acknowledge Merger Talks
Exxon Corp. and Mobil Corp., the nation's No. 1 and No. 2 oil companies, confirmed Friday that they are discussing a merger, sending their stock and the shares of other oil companies higher on hopes that the pair will make it to the altar followed by many others in the price-shocked oil industry.
An Exxon-Mobil matchup, with combined 1997 revenue of $203.1 billion, would create the world's largest publicly traded oil company, surpassing Royal Dutch/Shell Group, and it would zoom past General Motors Corp. as the largest U.S. company.
The potential deal would dwarf British Petroleum Co.'s $49-billion acquisition of Amoco Corp., now nearing completion. As with that merger, the combination of Exxon and Mobil would mark a family reunion of sorts for pieces of John D. Rockefeller's storied Standard Oil monopoly, which was broken apart almost 90 years ago.
But such a behemoth transaction would certainly face regulatory scrutiny in the United States and Europe, although it probably would be completed eventually after the sale of some refining and marketing assets, analysts said.
If Exxon and Mobil do end up with a deal, the bright light of merger mania will certainly shine on the next tier of oil companies. They include San Francisco-based Chevron Corp., No. 3 among U.S. oil companies, and Los Angeles-based Atlantic Richfield Co., No. 7, which both have voiced their intention to remain independent.
*
In a terse statement released early Friday, Irving, Texas-based Exxon and Fairfax, Va.-based Mobil said they "are in discussions concerning a possible combination transaction."
"No definitive agreement has been reached. We cannot give any assurance that an agreement will be reached," the statement said. The companies had no further comment on the talks, which were first reported in Thursday's editions of the Financial Times. The newspaper, citing unnamed sources close to both companies, said Exxon and Mobil plan to hold a news conference Monday or Tuesday in New York.
Mobil's stock jumped $7.63 to close at $86 on the New York Stock Exchange after trading as high as $87 per share.
Shares of Exxon rose $1.69 to close at $74.38, after reaching $77.31, also on the NYSE.
The sheer size of an Exxon-Mobil merger, analysts said, ensures that politicians will demand that antitrust regulators in the U.S. and Europe closely scrutinize the deal. But these analysts said regulators are likely to ultimately approve the combination and insist only that the firms divest a limited number of operations in specific markets where a merger would mean too much concentration.
