Merger Talks Send Oil Stocks Gushing: Exxon, Mobil Deal Would Hurt Fairfax

By Burn, Timothy | The Washington Times (Washington, DC), November 28, 1998 | Go to article overview

Merger Talks Send Oil Stocks Gushing: Exxon, Mobil Deal Would Hurt Fairfax


Burn, Timothy, The Washington Times (Washington, DC)


Exxon Corp. and Mobil Corp. shares surged yesterday to record levels after the two petroleum giants confirmed they are discussing a merger that would create the world's largest oil company.

The merger could prompt significant layoffs, including some in Fairfax County, as the entire industry struggles to cut costs amid the continued slump in world oil prices, now hovering at a 12-year low.

The two companies have a combined work force of 123,000, with 42,700 working for Mobil, 2,300 at its Fairfax headquarters.

"This merger will give Exxon, the larger of the two, the right to begin shrinking Mobil's Fairfax headquarters as expeditiously as possible without screwing up operations," said Michael P. O'Brien, an analyst at Bingham Dana LLP, in Boston.

Alan Marshall, an energy analyst with Robert Fleming Securities in London, projected job cuts of up to 20,000 - about 16 percent of the companies' combined work force, with most of the job losses in the United States, followed by Asia.

Shares of Mobil, the No. 2 U.S. oil company, jumped $7.62 to $86 on the New York Stock Exchange, while shares of Exxon, the nation's largest petroleum company, rose $1.69 to $74.75.

Exxon, based in Irving, Texas, ranks only behind Royal Dutch-Shell among the world's oil companies, and Fairfax-based Mobil is fourth worldwide.

The companies are children of Standard Oil Trust, John D. Rockefeller's oil monopoly that was broken up by the government in 1911. Exxon is the former Standard Oil of New Jersey, while Mobil was once Standard Oil of New York.

The companies released a brief joint statement yesterday confirming earlier reports they are in merger talks.

"We cannot give any assurance that an agreement will be reached," the statement said.

Neither company would comment further on the talks, though the Financial Times, citing sources close to the negotiations, said the companies plan to hold a news conference Monday or Tuesday in New York.

Analysts said a merger between Exxon and Mobil would have little impact on consumers who already enjoy low prices at the pump. The combined companies would control about 20 percent of all gasoline pumps in the United States.

"The last thing either party would have considered is the effect on the consumer, but as it happens it's pretty benign," Mr. Marshall said.

The possible Exxon-Mobil marriage comes on the heels of British Petroleum's announcement in August that it planned to purchase Amoco for $49 billion, and analysts predict more mergers to follow. …

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