NEW YORK (CNN/Money) -
Shell Oil Co. agreed to acquire motor oil maker Pennzoil-Quaker State Co. Monday for about $1.8 billion in cash.
Shell, a member of the Royal Dutch/Shell group, said it will pay $22 a share for Pennzoil (PZL: Research, Estimates), which makes the nation's No. 1 and No. 2 brands of motor oil. That represents a premium of about 42 percent over Pennzoil's closing price of $15.49 Friday.
Shell also will assume Pennzoil-Quaker State's outstanding debt.
A Shell spokeswoman said the company expects layoffs of about 15 percent of the combined workforce of Shell Lubricants and Pennzoil. Pennzoil has about 5,150 employees.
The transaction is expected to be completed in the second half of 2002 and add to Shell's earnings in the first full year after completion.
In addition to Pennzoil and Quaker State motor oils, which Shell says ultimately will replace the company's use of competitor ChevronTexaco Group's (CVX: Research, Estimates) Havoline, Shell is acquiring more than 2,000 Jiffy Lube stores.
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"The combination of Shell and Pennzoil-Quaker State Co., the largest independent lubricants company in the world, will make Shell a leader in the U.S. and global lubricants market," Royal Dutch/Shell Managing Director Paul Skinner said. "It also strengthens our U.S. oil products business."