Chevron Corp. on Thursday said its Chevron Products Co. unit agreed to buy Amoco Corp.'s retail motor-oil and industrial-lubricants brand name for three years to gain a foothold in the Midwest.
San Francisco-based Chevron, the third-largest U.S. oil company based on market value, said the purchase includes Chicago-based Amoco's product names and formulations, but not production facilities. Financial terms weren't disclosed.
The transaction would give Chevron, which sells fuel primarily in the West and South, instant retail sales customers in the Midwest.
"It positions Chevron as the leading marketer of heavy-duty and industrial oils in North America, and at the same time strengthens us in the industrial heartland of America," said Peter McCrea, vice president of Chevron Global Lubricants, in a statement.
Under terms of the agreement, Amoco would sell Chevron the permanent rights to certain non-Amoco brand names such as industrial lubricants Rykon and Supermill, and sell the license to Amoco brand names for three years.
"Chevron has U.S. refining operations, and they need a market to sell the stuff. Amoco has a good name and reputation--some people go out of their way to buy Amoco gas," said Holly Gustafson, an analyst at BT Alex. Brown Inc.
Chevron will try to win over Amoco customers to the Chevron brand name during the three years, said Alison Jones, a Chevron spokeswoman.
"We're acquiring a number of product names . . . and over time allowing customers to pick and choose. Our plan is to convert everything to [the] Chevron brand name," Jones said.
In New York Stock Exchange trading, Chevron shares fell $1.38 to close at $78.06, and Amoco shares fell $1 to $41.19.