Amoco Becomes BP Amoco Plc. in Landmark Energy Merger

As the last business day of 1998 comes to a close, Amoco Corporation will cease to exist, with the company officially merging with British Petroleum Co. to form BP Amoco Plc., a new entity valued at approximately $54 billion. The Federal Trade Commission has given its approval for the merger, which is expected to be completed by the end of Thursday, December 31. While this news marks the end of an era for Amoco as a standalone company, the city of Chicago may see job growth in the long term. However, the FTC has imposed conditions on the merger to address antitrust concerns, including the sale of some facilities and gasoline stations.

Key Takeaways:

• The FTC approved the merger of Amoco and British Petroleum Co. to form BP Amoco Plc. with a market value of approximately $54 billion.
• The companies will sell off some facilities and gasoline stations to address antitrust concerns, including nine petroleum terminals in the southeastern United States and all gasoline stations in Tallahassee and Pittsburgh.
• Overlapping operations between the two companies could lessen competition in 30 markets, prompting the FTC to require the companies to allow their wholesale customers to cancel their franchise agreements and link with other brands.
• The merger will result in the creation of the world's third-largest energy company, with Amoco shareholders receiving 3.97 shares of BP Amoco Plc. for each share of Amoco held.
• The company will have a significant presence in Chicago, with the city becoming the headquarters for BP Amoco's North American operations and the base of the worldwide chemicals business.
• Job cuts are likely to hit hardest at the corporate level, with Amoco's approximately 2,200 headquarters employees in Chicago at risk of losing their jobs.

Statistics:

• The merger is valued at approximately $54 billion.
• The companies will sell off 9 petroleum terminals across 6 states and all gasoline stations in Tallahassee and Pittsburgh.
• Overlapping operations between the two companies could lessen competition in 30 markets.
• More than 1,600 stations in Pennsylvania, Ohio, and the South could be affected by the merger.
• Amoco shareholders will receive 3.97 shares of BP Amoco Plc. for each share of Amoco held.
• The company will trade on the New York, Chicago, Pacific, and Toronto stock exchanges in the form of American depository receipts (ADRs).

Sources:

• "Amoco Becomes BP Amoco Plc. in Landmark Energy Merger," Chicago Tribune, December 31, 1998
• Federal Trade Commission press release announcing approval of the merger
• British Petroleum Co. and Amoco Corporation press releases announcing the merger