Record Oil Merger Amoco Employees Hope for the Best in Merger with BP
Culloton, Dan, Daily Herald (Arlington Heights, IL)
Byline: Dan Culloton Daily Herald Business Writer
The news snapped Terry Wallace awake as he dragged a razor across his face during his normally sleepy morning routine.
The voice on the radio reported British Petroleum PLC was buying his employer of 21 years, Amoco Corp. in the biggest merger in oil industry history.
"What did they say?" Wallace's wife shouted from another room in their Naperville home.
"A good deal just happened," he said.
"What does that mean for you?"
"I don't know."
BP's $48 billion purchase of Chicago-based Amoco simultaneously excited and jangled the nerves of Wallace and thousands of other local Amoco employees.
The Amoco headquarters downtown and its offices in the West suburbs vibrated with speculation after BP announced it was offering 3.97 of its shares for each Amoco share, or about $50 per share.
Including assumed debt, the deal is worth about $54 billion, beating out the $42 billion merger of Chrysler Corp. and Daimler-Benz as the largest proposed industrial merger to date, according to Securities Data Corp.
The new BP Amoco PLC will be one of the top three oil companies in the world with Royal Dutch/Shell Group and Exxon.
It also will be the largest company in Britain, with an initial market capitalization of $110 billion and revenue of $108 billion.
Amoco's stock jumped $6 Tuesday to $46.87 1/2, while BP's American Depository Receipts, worth six of its London shares, rose $2.12 1/2 to $78.12 1/2, both on the New York Stock Exchange.
The deal is expected to strengthen both companies' positions in a consolidating industry, wracked by low prices and to create abundant opportunities for ambitious workers.
That is for the ones who are left.
The new company expects to cut 6,000 of its combined work force of 100,000 as it tries to generate $2 billion in cost savings and extra earnings by 2001.
BP Amoco will make most of the cuts in the United States as it consolidates the Houston offices of both companies and loses 1,000 jobs when it closes BP's current North American headquarters in Cleveland, Ohio.
"We can assume that administrative departments will be more vulnerable to cuts than the operational personnel and research people," said John Kennedy, editor of Oil & Gas Journal in Houston. "The reason I say that is because there already has been some downsizing of operational people and now there is a real call for engineers and technical people in the industry."
Local employees interviewed Tuesday took encouragement from such predictions and BP Amoco's apparent decision to maintain a strong presence in the Chicago area.
"Overall the merger is going to make Amoco a stronger company in the United States and in the Chicago area," said James Siddall, a manager who has worked for Amoco for 17 years. …