ChevronTexaco eyes Phillips or Conoco, report says

ChevronTexaco eyes rivals

January 30, 2002: 10:28 a.m. ET

No. 2 U.S. oil company may bid for Phillips or Conoco, which plan to merge.

NEW YORK (CNN/Money) - ChevronTexaco Corp. is eyeing a takeover bid for Phillips Petroleum Co. or Conoco Inc. in a bid to break up the planned $17 billion merger between the two oil producers, a newspaper reported Wednesday.

The Wall Street Journal, citing people familiar with the situation, said ChevronTexaco's board is slated to weigh a possible unsolicited bid for one of those companies at a meeting Wednesday.

The Phillips-Conoco merger, which would create the No. 3 U.S. oil company, is expected to close later this year, but there has been speculation in the oil industry that another company may try make a competing bid.

The nation's No. 2 oil company had not decided as of Tuesday evening which of the two companies it will pursue, the report said.

ChevronTexaco (CVX: down $2.84 to $82.33, Research, Estimates) stock fell about 2 percent while shares of Conoco (COC: up $1.12 to $28.62, Research, Estimates) and Phillips jumped on the report.

Officials at ChevronTexaco were not immediately available to comment. A Conoco spokesman declined to comment.

A deal between Phillips (P: up $0.96 to $58.52, Research, Estimates) and Conoco has been seen as vulnerable because it carries no premium for shareholders, and might not pose a material challenge to domestic leaders Exxon Mobil Corp. (XOM: up $0.10 to $38.05, Research, Estimates) and ChevronTexaco.

People familiar with the matter say France's Totalfina Elf may make a bid and recently retained Lehman Brothers Holdings to explore a potential offer, but so far it has not decided whether to make an approach, the newspaper said.

ChevronTexaco, created in a $38 billion merger last year, is having merger-related problems of its own. The company Tuesday reported a $2.5 billion fourth quarter loss, as it took merger-related charges of $1.2 billion. It now expects merger expenses of $2 billion, $500 million more than its initial estimate.