BP's $30 Billion Takeover of Amoco Clears Regulators with Minimal Conditions

Strategic Insights -

The $30 billion takeover of Amoco by British Petroleum (BP) has been cleared by American regulators, with only minor conditions attached. The Federal Trade Commission (FTC) has given its approval for the merger, which will create Britain's largest company with over 100,000 employees, on the condition that the combined group sells off 134 petrol stations and allows 1,600 independent petrol retailers to switch brands if they wish.

Key Takeaways:

  • The merged company will own nearly 16,000 petrol stations, with the sale of 134 stations being barely noticeable.
  • The sale of 134 petrol stations and the permission for 1,600 independent retailers to switch brands if they wish is considered a light set of conditions by market experts.
  • The FTC's decision is seen as an attempt to appear tough before ruling on the planned Exxon-Mobil tie-up, where the overlap between the two companies is considered more substantial.
  • The merger will make Sir John Browne, BP's chief executive, double his pay to £3.5 million and make him eligible for a substantial share windfall if the company meets its performance targets.
  • The deal is part of a wave of corporate mergers designed to counter tumbling oil prices.
  • BP shares fell 10.5p to 897.5p after the announcement, but the company welcomed the FTC's decision.

Statistics:

  • The combined group will have a market capitalisation of $140 billion (A$84 billion).
  • The merger will create Britain's largest company with over 100,000 employees.
  • The sale of 134 petrol stations will account for less than 1% of the combined group's total petrol stations.
  • 1,600 independent petrol retailers will have the option to switch brands if they wish.
  • Sir John Browne's pay will rise to £3.5 million.

Sources:

  • "Largest oil merger cleared by regulators" by the BBC
  • "BP/Amoco merger wins approval from FTC" by Reuters
  • "British Petroleum to merge with Amoco" by The Times
  • "Sir John Browne to head merged energy giant" by The Financial Times