Arco to Sell 24% Stake in Britoil to BP for Estimated $1.08 Billion

Atlantic Richfield Co. said Friday that it has agreed to sell its 24% stake in Britoil, a large North Sea oil producer, to rival Britoil suitor British Petroleum Co. PLC for an estimated $1.08 billion.

The deal boosts the efforts of British Petroleum, the world’s third-largest energy company, to acquire all of Britoil and its prize possession: control over oil and gas reserves estimated at the equivalent of 1.2 billion barrels of crude oil in Britain’s North Sea.

It also gives Los Angeles-based Arco pretax and pre-expense profits of about $238 million for its six-week investment in Britoil.

Although both sides would appear to have emerged the stronger for their encounter, such a fortuitous result was not assured when the takeover battle began in December with BP’s immediately rebuffed offer for Britoil.

The deal heated up several days later when Arco, with the approval of Britoil officials, stepped into the fray with a rival bid for up to 49% of Britoil.

By mid-January, Arco said it had acquired through open-market purchases 24.03% of Britoil for an average purchase price of 3.89 pounds per share, the equivalent of $839 million at current exchange rates.

No Strings

As Arco built up its stake in Britoil, BP decided to sweeten its offer for the company. On Friday, BP increased its bid price to 5 pounds per share, from 4.5 pounds.

An Arco spokesman said that despite the company’s long-term interest in Britoil, the BP offer was too good to pass up. “We went into this seriously to see what would develop over the long term,” the spokesman said. “But this was an attractive price we felt was too good to walk away from.”

The spokesman said Arco will receive nothing other than the cash value of its shares for agreeing to sell them to BP. “There are no strings or side deals,” he said. “It was simply a deal to sell stock.”