News > International
BP-Arco deal hits snag
November 2, 1999: 12:50 p.m. ET

U.S. regulators may block $27B deal on concerns about prices, Alaska
graphic graphic
NEW YORK (CNNfn) - BP Amoco PLC's proposed $27 billion takeover of Atlantic Richfield Co. may be blocked by U.S. regulators over concern about its impact on gasoline prices in Pacific Coast states.
     The FTC, which already is investigating high gasoline prices that have become a sore point among California motorists, is taking a close look at the effects of the proposed merger on fuel prices in California, as well as Washington and Oregon. The agency reportedly is preparing a lawsuit to stop the deal.
     "They have been preparing to go to court for this one and they don't think there is a settlement that is going to happen," a lawyer familiar with the FTC's views told Reuters.
     The two sides are said to be at loggerheads over planned divestitures in Alaska, which BP Amoco would dominate after the deal by controlling about three-fourths of production in that oil-rich state.
     Consolidation in the oil industry has accelerated over the past year, with BP buying Amoco, Exxon (XON) and Mobil (MOB) agreeing to merge, and Texaco (TX) and Chevron (CHV) mulling, then walking away from a deal. U.S. officials are continuing their probe of Exxon-Mobil.
     On Friday, BP Amoco triggered a provision that requires FTC officials to approve or reject the deal within 20 days. As a matter of practice, the FTC suspends talks in such a case.
     Alaska Gov. Tony Knowles, in a letter to FTC Chairman Robert Pitofsky Sunday, urged federal officials to block the deal, saying Alaska suspended talks until the companies turn off that ticking clock.
     BP Amoco said it had done just that. "We're still talking" to Alaska and the FTC, a spokesman said.
     When the deal was announced in April, the companies touted its ability to provide about $1 billion in annual cost savings, starting in 2001. Of that total, $200 million is expected by "streamlining" Alaska operations, the companies said.
     In August, the two received permission from the European Union, and shareholders voted to approve the deal. The FTC recently told BP that it doesn't require any further information from the company, which can lead to a ruling within 20 days.
     The American depositary receipts of BP Amoco (BPA) fell 1-3/4 to 55-1/2 on the New York Stock Exchange Tuesday, while Arco (ARC) shares lost 5 to 87-3/16.
     BP Amoco's plan was to complete the merger by year-end, and the spokesman said the company still plans to do so. Back to top
     -- from staff and wire reports


EU clears BP Amoco deal - Aug. 13, 1999

BP Amoco's $26.8B deal - April 1, 1999


BP Amoco

Atlantic Richfield

Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney