Conoco, Phillips stockholders OK merger

`Bigger is better in the energy field,' a fund manager says

March 13, 2002|By BLOOMBERG NEWS

HOUSTON - Conoco Inc. and Phillips Petroleum Co. shareholders yesterday approved the companies' planned $27.6 billion merger that would create the third-largest U.S. oil company and save an estimated $750 million in annual costs.

Conoco investors will get 0.4677 of a share in the new company for each share they hold. Phillips holders will swap stock 1-for-1. That values Conoco at $18.2 billion, using Monday's closing share price for Phillips stock. Conoco had $9.4 billion in debt at the end of last year.

Oil companies are under pressure to combine because of competition from rivals bulked up by mergers, such as those that created Exxon Mobil Corp., the world's largest oil company, and ChevronTexaco Corp., the No. 2 in the United States. Phillips and Conoco have said they will have enough financing to pursue expensive projects in Central and Southeast Asia, even if oil prices fall.

"It's a good deal" said Scott Vergin, a fund manager with Lutheran Brotherhood Series Growth Portfolio, which owns shares of both companies. "Bigger is better in the energy field."

ConocoPhillips will be based in Houston. The companies said they will save about $750 million within the first year by streamlining exploration and production and eliminating duplicate corporate jobs.

"Our two companies have complementary assets, complementary expertise and complementary business objectives," Conoco Chairman and Chief Executive Officer Archie Dunham said at the meeting near the company's west-Houston headquarters. "This [merger] was just the next logical step."

Dunham said it's "premature" to estimate how many jobs will be eliminated. The combined company will "maintain a substantial work force" in Bartlesville, Okla., where Phillips is based, he said.

Conoco said 96 percent of shares cast at a special meeting in Houston favored the merger. About 97 percent of Phillips holders at a session in a suburb of Tulsa approved the combination, the company said in a statement.

The merger, expected to close in the second half of the year, still needs approval from the Federal Trade Commission. European and Canadian regulators have approved it.

U.S. regulators asked the companies for more information about the merger on Jan. 17. The companies have "had no substantive conversations yet with the FTC," Dunham said.

Phillips Chairman and Chief Executive Officer James Mulva, 55, will be chief executive of the new company. Dunham will be chairman.

Shares of Conoco rose 27 cents to $28.75 yesterday. Phillips gained $1 to $62.40.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.