Here we go again.
Tosco Corp., owner of the Circle K convenience store chain, is being acquired by Phillips Petroleum Co. in a $7 billion stock purchase deal scheduled to close this fall.
Tosco has just finished renovating 37 stations in Augusta that it acquired in 1999 from Augusta-based Boardman Petroleum Inc., which operated the stores under its Smile Gas banner for more than 20 years.
Now, six months after Tosco's major rebranding effort, the Circle K and 76 stations are destined for conversion to the Phillips 66 brand.
Phillips spokeswoman Kristi DesJarlais said the company does not know when the changeover will take place.
"For now, our plan is to continue operating under the current brand," she said. "I don't think you'll see any change in the immediate future."
The company expects some job loss at the corporate level but said staffing at the retail level should remain the same. The combined company's refining, marketing and transportation operations will be located in Tempe, Ariz., the current home of Tosco's marketing arm.
"For folks here, that's good news," Tosco spokeswoman Julie Igo said.
In Georgia, Phillips has 263 gas retail outlets and 21 petroleum product storage facilities.
Bartlesville, Okla.-based Phillips announced Sunday it would offer 0.8 shares of Phillips stock for each share of Tosco, valuing Tosco shares at $46.50, a 34 percent premium. Phillips also will assume approximately $2 billion in Tosco debt.
The acquisition of Tosco, the country's No. 3 refiner and No. 2 convenience store chain, will make Phillips more competitive with larger industry peers Exxon Mobil Corp., Chevron Texaco, Royal Dutch/Shell Group and BP Amoco PLC.
The merged company will process 1.35 million barrels of oil daily and expand Phillips' Midwestern retail network toward both coasts.
Phillips said it has sought to boost its refining, marketing and transportation businesses since last year's $6.5 billion purchase of Atlantic Richfield's Alaska properties to heavily tilt the company toward exploration and production.
"This really balances our asset portfolio," Ms. DesJarlais said.
However, Phillips' announcement surprised Wall Street because the company had previously told the investment community it would focus on creating efficiencies in its exploration and production businesses.
Shares of Phillips closed Monday at $53.35, down $4.78 on the New York Stock Exchange.
"I think you're seeing the market react negatively because this is not what they said they would do," Edward Jones energy analyst Kate Warne said, adding that investors might be spooked by the premium Phillips is paying Tosco shares given that companies will have to reinvest heavily in facilities to meet new federal fuel standards.
"Refiners have been quite profitable in last six months or so ... but there is a question whether these will be profitable assets or just expensive assets," she said.
Phillips had told analysts its preferred method of growing its refining and marketing operations would be though a joint venture, rather than acquisition. Phillips already has joint ventures with Chevron Corp. for its chemicals business and Duke Energy for natural gas processing and marketing.
Phillips had tried to unload some of its refining and marketing operations in a deal with Conoco Inc. that fell through in 1996.
Reach Damon Cline at (706) 823-3486 or firstname.lastname@example.org.
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