Originally created 12/31/98

British Petroleum-Amoco merger approved

The $53 billion merger between British Petroleum Co. and Amoco Corp. is set for consummation today following federal regulatory approval Wednesday.

The stock merger will create the world's third-largest oil company, called BP Amoco p.l.c., with a network of about 27,000 gasoline stations.

As part of the deal, all domestic BP stations would adopt the Amoco name, the brand more easily recognized by U.S. consumers. Stations elsewhere in the world would remain BP branded or converted to BP.

An executive with metro Augusta's largest BP distributorship said not to expect changes at local stores for six months to a year.

"The new team is going to have to get together before any changes are made," said Tim Dangerfield, vice president of Aiken-based R.H. Maxxon Inc., which operates 16 BP stations and five Amoco stations in the metro Augusta area. "No one knows what's going to happen. It's kind of a sit and wait and see situation."

In approving the deal Wednesday, the Federal Trade Commission said it found few reasons for concern.

"Where they do overlap, mainly in wholesale and retail sale of gasoline in local markets in this country, the commission with the cooperation of the companies has achieved substantial divestitures and other relief," said FTC Chairman Robert Pitofsky.

To address antitrust concerns, the companies agreed to sell 134 company-owned stations in eight markets and give owners of more than 1,600 gasoline stations in 30 cities, including Albany, Athens and Savannah, permission to end their contracts early.

Neither ruling affects Augusta, where BP and Amoco have no company-owned stores.

BP and Amoco gas in metro Augusta is sold primarily by two independent intermediaries, or "jobbers" as they are known in the industry. One is R.H. Maxxon, the other is Augusta-based Koger-Walters Oil Co., which owns and operates 12 Amoco stations in the metro area.

The deal means the area's small "mom and pop" BP stations, such as Bill Giradot's Hill BP on Central Avenue, will have to convert to Amoco brand until their original BP contract expires.

"I still miss that big, yellow disk," said Mr. Giradot, referring to the days when he sold Gulf Oil before it was acquired by BP several years ago. "But I guess you have to change with the times."

The conversion of BP to Amoco will not lower the company's retail gas prices in the Augusta market, which are already among the lowest in the nation, said Marty Koger, co-owner of Koger-Walters Oil.

"Locally, it just means there's more stations selling Amoco brand gas," Mr. Koger said.

However, BP and Amoco will have to sell petroleum terminals in Augusta and eight other markets to Tulsa-based The Williams Cos.

The concentration of terminals, points where petroleum products are received at the pipeline, would make entry into the market and switching brands by independents too "difficult," according to the FTC.

The BP/Amoco deal is largely eclipsed by the pending $77.2 billion merger of Exxon and Mobil, which would combine the biggest U.S. oil companies. Analysts said Exxon and Mobil also probably will have to sell off gas stations and refineries in regions where, together, they would dominate the market.

In a joint statement, London-based British Petroleum and Chicago-based Amoco said they will complete the merger at 4 p.m. Thursday, when U.S. markets close. The companies had previously said they wanted to complete the deal by year's end.

"We set ourselves the demanding target of closure by year-end," BP Chief Executive John Browne and Amoco Chairman Larry Fuller said in a statement. "We are delighted that we will achieve that and, in the process, set a new record of 100 working days for the completion of such a large and complex transaction."

The Associated Press contributed to this article.

Damon Cline covers business issues for The Augusta Chronicle. He can be reached at (706) 823-3486.


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