BP Amoco Makes Pledge of $100 Million in Charity
Striving to address fears about its proposed merger with Atlantic Richfield Co., BP Amoco on Thursday committed to making $100 million in charitable contributions over 10 years in California, but acknowledged that it would fire about 600 people at Arco’s downtown Los Angeles headquarters.
Under pressure from state officials, the London-based oil giant also vowed to retain Arco’s strategy of low gasoline pricing and accelerate the removal of the controversial additive MTBE from Arco gas sold in California to the end of 2001, a year ahead of the schedule mandated for the industry by Gov. Gray Davis.
Davis and state Atty. Gen Bill Lockyer applauded BP Amoco’s pledges, but Lockyer said the state is continuing to investigate how the proposed merger would affect California consumers.
“We are still cooperating with the Federal Trade Commission and the other Western states to try to minimize the anti-competitive aspects of this merger that are inevitable in its proposed form,” said Lockyer, who is also investigating gasoline pricing practices in California, where gas sales are dominated by Arco and San Francisco-based Chevron Corp.
Lockyer has said that state law gives him the authority to block a merger if he concludes that it would result in a monopoly. His office has raised concerns about potential effects on prices at the pump, given the companies’ combined two-thirds control of production in Alaska, which supplies most of the oil that is refined into gasoline here.
BP Amoco announced April 1 that it would buy Los Angeles-based Arco in a stock swap valued at about $27 billion. BP Amoco Chief Executive John Browne has said he expects to save $1 billion by eliminating overlap between the two companies, but he has projected only 2,000 total layoffs, primarily in Southern California and Texas.
Browne told The Times that job losses at Arco’s headquarters would amount to about 600. Arco employs about 3,600 people in Southern California and about 18,000 worldwide. He said Arco’s layoffs would be greater outside California than inside.
“Job losses will occur only at the corporate headquarters in Los Angeles, because quite clearly there are some functions there that are duplicated,” he said. “It is not job losses in operations . . . service stations and refineries.”
In terms of a continuing civic commitment in Los Angeles, Browne said: “There will be senior executives in L.A., and they will be representing the company on the relevant boards and councils and so forth. We’ll be making sure that a very senior member of BP Amoco-Arco will be in L.A. and will have as his or her prime duties these sorts of activities.”
Davis and Browne said the 10-year, $100-million commitment from BP Amoco, as the resulting corporation would continue to be known after the merger, represents a 25% increase in philanthropy compared with the $8-million annual average during the last decade. This year, Arco had budgeted $12 million in corporate giving.
“Above all, we are determined to continue to play a vital role in making California a great state in which to live and do business and we look forward to working with you and your colleagues in fulfilling that aspiration,” Browne wrote Davis on Nov. 4. A copy of that letter was sent to Lockyer, who has said he intends to seek a legally binding agreement by the merged company that it would maintain Arco’s tradition of charitable giving.
Davis was particularly pleased with BP Amoco’s pledge to wean itself off MTBE a year before the deadline of 2002. MTBE reduces air pollution but is believed to cause cancer.
“Sir John Browne has a very good reputation for running a cutting-edge company with a strong environmental bias,” Davis said. “I think his promise to make a good-faith effort to phase out MTBE one year earlier is a model that should be emulated.”
Thursday’s announcement came after the close of markets. In New York Stock Exchange trading, BP Amoco rose $1.56 to $60 and Arco shares gained $2.38 to $95.19, a 52-week high.
