BP Amoco Sets Deadline for Arco Buyout
BP Amoco will decide within 10 days whether to offer more concessions or to fight U.S. antitrust regulators who have so far rejected the London-based oil giant’s $29-billion buyout of Los Angeles-based Atlantic Richfield Co., sources said Thursday.
Though BP Amoco said it still hopes to negotiate a settlement, Federal Trade Commission Chairman Robert Pitofsky is unlikely to back the buyout under any terms, people familiar with the dispute say, because of his concern that further consolidation of the oil industry endangers competition.
The buyout would give BP Amoco control over almost three-quarters of Alaskan oil production, which the FTC maintains could allow the company to raise West Coast gasoline prices.
The five-member commission has not yet formally voted on the proposed merger, but the agency’s staff rejected BP Amoco’s offer to sell some Alaskan land and declines to say what must be sold to win approval, the sources said.
Meanwhile, California still opposes the merger as currently proposed, said state Atty. Gen. Bill Lockyer, who added that negotiations continue primarily at the federal level.
“The goal for Californians is to have a more competitive gasoline market,” Lockyer said. Because only six companies, led by Arco and San Francisco-based Chevron Corp., control more than 90% of retail gasoline sales in California, the state’s motorists spent $2 billion more last year on gasoline than they would have in a more open market, he said.
BP Amoco could decide as early as next week whether to offer to sell more Alaskan properties or to announce its intention to complete the merger without FTC approval within 20 days, one person familiar with the talks said. If BP Amoco moves ahead with the buyout, the FTC is expected to sue in federal court to stop the union.
“It appears very doubtful that the parties can reach an agreement,” said Steven Newborn, a Washington antitrust lawyer.
Alaska is the country’s No. 2 oil-producing state behind Texas. BP and Arco together produce 724,000 of the 1 million barrels of crude oil pumped from the state each day, most of which goes to producing gasoline in California, Oregon and Washington.
BP Amoco has had no meetings this year with the FTC but says it still hopes to reach an agreement.
The prospect of a legal fight “depends on what we hear from the FTC,” company spokesman Tom Koch said.
Arco shares, which have slid 17% in seven weeks on concern that the merger is bogged down, rose 69 cents to close at $80.63 on the New York Stock Exchange. BP Amoco’s American depositary receipts, each representing six ordinary shares, rose 13 cents to close at $60.63, also on the NYSE.
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Bloomberg News and Times staff writer Nancy Rivera Brooks contributed to this report.
