Exxon to Pay $77.2 Billion for Mobil to Form Largest Company
NEW YORK (AP) -- Pulling off the richest corporate takeover in history, Exxon will buy Mobil for $77.2 billion to create the world's largest company and reunite two of the biggest pieces left by the breakup of John D. Rockefeller's Standard Oil empire.
The deal, announced Tuesday, joins the nation's two largest oil and gas companies. It's the latest example of rapid consolidation in an industry whose profits have been slashed by worldwide overproduction and weak demand.
However, despite the massive size of the new Exxon Mobil Corp., the global trends that prompted the deal are expected to keep pump prices at rock-bottom levels for now. Exxon Mobil will surpass Royal Dutch-Shell Group as the No. 1 energy company and vault past General Motors as the largest corporation in the world, with $203 billion in combined revenue last year. Exxon is about twice Mobil's size in annual revenue. Company executives said Tuesday they expect the deal to reduce annual expenses by $2.8 billion. That includes to elimination of roughly 9,000 jobs or about 7 percent of the companies' combined work force of 123,000. The decision to merge two once-fierce competitors was necessary given the increasingly difficult competitive climate, the companies said. "We need to face some facts. The world has changed," Mobil Chairman Lucio Noto said at a news conference. "The easy things are behind us." Exxon Mobil will have about 48,500 gas stations around the world, with roughly a third in the United States, plus exploration and production operations worldwide. On a daily basis, the companies together produce 2.5 billion barrels of oil and equivalent amounts of natural gas -- more than Kuwait. The companies' well-known gas station brand names -- along with the Exxon tiger and Mobil's red Pegasus -- will be retained. But analysts expect the companies will have to sell off numerous gas stations and refineries to satisfy government antitrust regulators. The stock swap deal will give Mobil shareholders 1.32 shares of Exxon. It tops British Petroleum's planned $58.5 billion purchase of Amoco as the largest corporate takeover and, at current stock prices, outranks Bell Atlantic's $72.6 billion merger with GTE and the $69. …