Merger of Phillips, Conoco completed
WASHINGTON (AP) -- Phillips Petroleum Co. and Conoco Inc. merged Friday to create the third-largest U.S. oil and gas company after receiving federal approval for the $15.1 billion deal.
The Federal Trade Commission voted 5-0 for the deal, but required the companies to sell refineries in Utah and Colorado and certain operations in Missouri, Illinois, New Mexico, Texas and Washington state.
In Alaska, where Conoco had a minimal presence, no divestitures are required as a result of the merger.
But the move is expected to result in the loss of about 60 jobs, out of 950 in Alaska, as support functions are switched out of state, Phillips executives said earlier this month. The cut amounts to about 6 percent of the Alaska work force.
And the state may not loom as large in the plans of the combined company. Alaska represented about half of the production for Phillips. It will provide about a quarter of the output for ConocoPhillips, which has operations in 49 countries around the globe.
Joe Simons, director of the FTC's Bureau of Competition, said the agency believes the conditions attached to the agency's approval will help maintain competition in the energy market.
The companies announced in November their intention to merge and to base the new company in Houston. Shareholders gave their approval last spring.
The deal creates the world's sixth-largest oil and gas company. In the United States, ConocoPhillips is No. 3 behind Exxon Mobil Corp. and ChevronTexaco Corp.
The companies said they completed the merger a few hours after receiving FTC approval.
Archie Dunham, chairman of the board of ConocoPhillips, told reporters that consumers would not see changes in familiar brand names.
''We'll take advantage of the Conoco brand where it's the strongest brand. We'll use the Phillips brand where it's the strongest,'' he said.
The combined company is now the country's top refiner and a gas retailing giant, with about 17,000 filling stations nationwide.
Fadel Gheit, an energy analyst with Fahnestock & Co., said the deal shouldn't affect consumers or gas prices.
''It was a step that was necessary for both companies. They could not have survived single,'' he said. ''Bigger is better in the business where you don't know where oil prices are going to be a year from now.''
Anticipating the FTC conditions, the companies already had begun selling some facilities.
Phillips, based in Bartlesville, Okla., is selling its Woods Cross refinery near Salt Lake City and 25 gasoline stations in Utah and southern Wyoming. Houston-based Conoco is unloading its 60,000-barrel-a-day refinery in Commerce City, Colo.
The FTC also is requiring Phillips to sell gas stations in eastern Colorado; a propane and butane storage plant in Spokane, Wash.; and propane facilities in Jefferson City, Mo., and East St. Louis, Ill. Conoco must sell certain natural gas wells in New Mexico and Texas, the FTC said.
The FTC had said the original merger proposal would have reduced competition, allowing ConocoPhillips to raise prices.
The agency said that while it was requiring the companies to sell gas stations in the West, the deal was unlikely to raise gasoline prices in the rest of the country.
On the New York Stock Exchange Friday, Conoco was up 60 cents, or 2.5 percent, at $24.55. Phillips was up $1.03, or 2 percent, at $52.58.
The new company has a market value of about $35 billion. Conoco shareholders received $15.1 billion in stock for their shares.
Conoco sells gasoline, diesel fuel, and other petroleum products at 5,000 outlets in the United States, while Phillips sells fuel at more than 12,000 stations under brands such as Phillips 66, Circle K, and 76.
Shareholders approved the deal in March.
Phillips shareholders got one share of ConocoPhillips stock for each Phillips share they own while Conoco shareholders got .4677 shares of the new stock for each of their shares. That means Phillips shareholders have a 57 percent stake in the new company and Conoco shareholders own 43 percent.
The 16-member board has eight members each from Phillips and Conoco. Dunham, Conoco's chairman, is to be chairman of the new company until 2004, when Phillips chairman Jim Mulva, the new chief executive, takes over.
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On the Net:
FTC: http://www.ftc.gov
ConocoPhillips: http://www.conocophillips.com