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Investors turn back to Exxon
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December 2, 1998: 10:20 a.m. ET
Exxon, Mobil shares back up early Tuesday on investor optimism
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NEW YORK (CNNfn) - Investors Wednesday are shaking off their initial skepticism about the proposed $80 billion merger of Exxon Corp. and Mobil Corp., pushing shares of both companies higher in early trading.
Investor concern that the mammoth Exxon and Mobil marriage would not pass regulatory muster caused both companies to shed some of their stock value Tuesday, but shareholders apparently absorbed some of the optimism expressed by Wall Street analysts overnight, pushing Exxon shares up 1/8 to 71-3/4 on the New York Stock Exchange.
Mobil shares were up 1 at 84-3/4 on the Big Board after the opening bell.
Aside from requests for asset sales, however, analysts said they expect few regulatory red flags to be raised in the United States since gasoline prices are at their lowest levels on record and competition is fierce.
"These two companies are rearranging the seats around the table of the biggest game in town. They are prepared for $12 oil; they are looking beyond that," said Fadel Gheit, analyst at Fahnestock & Co.
The merger is not only the biggest deal in history but it fundamentally recreates the oil map: It puts together a powerhouse that has more in common with the biggest oil-producing nations in the world, such as Saudi Arabia and Venezuela, than with other oil and gas companies.
It creates the world's largest publicly traded company in terms of revenue and will have a combined workforce of about 122,700 before any job cuts.
Exxon Corp. and Mobil Corp. agreed to merge Tuesday in a historic $80 billion deal that reunites fragments of the Standard Oil monopoly.
The merged company will be called Exxon Mobil Corp., retaining both the Exxon and Mobil brands. The company will be headquartered in Exxon's home city of Irving, Texas.
Exxon's Chairman and Chief Executive Officer Lee Raymond said he fully expects federal and international regulators to review the merger closely and noted it is likely the companies will be asked to sell some assets.
"We would be absolutely amazed, although pleasantly surprised, if the Federal Trade Commission said we did not have to rationalize some assets," Raymond said, adding it was premature to comment further.
Indeed, spokespeople for two state attorneys general offices say at least a dozen states already are in "talks" to determine the level of interest in launching a probe into the deal.
Concerns include market share and the merger's effect on competition.
Analysts say they expect Exxon and Mobil to be forced to divest some refining or service station assets in certain regions where their combined market share overpowers rivals before the merger will by federal regulators. 
-- from staff and wire reports
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