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Arco shares slide again
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December 2, 1999: 4:45 p.m. ET
Despite Alaska deal, FTC concerns dominate about BP Amoco’s $27B buyout
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NEW YORK (CNNfn) - Shares of oil company Atlantic Richfield Co. continued to sink Thursday even though Alaska removed a key roadblock to its $27 billion merger with BP Amoco Plc by approving their plans to sell off assets within the state.
Los Angeles-based Atlantic Richfield (ARC), known also as Arco, shed 4-1/16 to 88 Thursday. The shares lost 3-7/8 Wednesday after the staff of the Federal Trade Commission recommended that the FTC’s five-member panel reject the deal.
The continued slide came despite word from the companies that Alaska Gov. Tony Knowles agreed to a provisional plan by Arco and BP Amoco to sell reserves and exploration acreage within the state to encourage better competition.
"This is excellent news,” BP Amoco chief executive officer Sir John Browne said in a statement, adding the company is prepared to go back to the table with the FTC. "We believe this will provide us with the foundation for more focused and productive discussions with the Federal Trade Commission.”
The FTC is reportedly concerned what effect the merger would have on gasoline prices in California, which are already among the highest in the country. BP Amoco said it has a deal with California also.
As part of the Alaska accord, BP Amoco (BPA) said it would sell 175,000 barrels a day of production and 620,000 acres of government exploration leases if it wins approval for the merger. But one analyst said Browne may be willing to go further than that.
"They’d be willing to give up most of Arco’s production in Alaska,” Jeremy Elden, an analyst at Commerzbank, told Reuters. "And they could make arrangements to make sure they don’t become so dominant in the West Coast as to force out competitors.”
BP Amoco said the divestitures will have a small impact on the $1 billion in synergies it anticipates through the Arco merger.
A vote to reject the deal could face a court
challenge by the companies, and some industry
analysts say the oil producers have a good chance of winning in court.
American depositary shares receipts of BP Amoco lost 2-1/8 to 59-3/8 Thursday. 
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