SAN RAMON, California - ChevronTexaco Corp., the number two US oil company, announced Monday that it would purchase rival Unocal in a stock and cash deal valued at 18 billion dollars, including debt.
The deal came amid reports of a battle for Unocal among the US oil giant, Italy`s Eni SpA and China National Offshore Oil.
The sale, which must be approved by shareholders and US regulatory agencies, is expected to significantly strengthen ChevronTexaco`s position in the energy market.
"Unocal is a unique independent with supermajor assets that are an excellent fit with our existing portfolio and our long-term strategies," ChevronTexaco chief executive Dave O`Reilly said in a statement.
"It is an attractive transaction that provides value in both the near and long-term," O`Reilly said.
The deal for Unocal, one of the largest independent oil and gas exploration firms, will increase ChevronTexaco`s production and reserves by about 15 percent, the statement said.
It particularly expands ChevronTexaco`s assets in the Asia-Pacific region.
The combined firm would become the top oil and gas producer in Thailand and bring in extensive oil and gas producing operations in Indonesia.
The acquisition will also give ChevronTexaco the second-largest interest in the Azerbaijan International Operating Company oil producing operations, broadening its operations in the Caspian region.
"Over the past several years Unocal has been highly successful in building a portfolio of major international and deepwater assets and prospects," said Unocal chairman and CEO Charles Williamson.
"The combination with ChevronTexaco will provide the financial and technical resources to maximize the potential of these assets and prospects."
ChevronTexaco is structuring the deal as 75 percent stock and 25 percent cash, and it plans to assume 1.6 billion dollars in debt. ChevronTexaco expects to issue 210 million shares in the deal and pay 4.4 billion dollars in cash.
It comes amid record high oil prices that have boosted the stock value of major oil companies, propelling Exxon Mobil to the world`s largest company by market capitalization.
O`Reilly said deal would lead to "synergies in a number of operations and corporate functions" but made not specific mention of job cuts.
ChevronTexaco Corporation has about 47,000 employees and with its subsidiaries operates in some 180 countries .
Unocal has more than 6,000 employees, with most of its activities in Asia and North America. Unocal has no refining or marketing operations.
04/04/2005 13:35 GMT