BP and Amoco agree $110bn merger

11 August 1998 14:21  [Source: ICIS news]

LONDON (CNI)--British Petroleum and US oil major Amoco are to join forces in the world's largest industrial merger which will create a petrochemical giant with a market capitalisation of about $110bn.

BP said Tuesday the combined enterprise will be called BP Amoco Plc and be headquartered in London. It will be headed by BP chief executive John Browne and co-chaired by BP chairman Peter Sutherland and Amoco chairman Larry Fuller.

The merger will be effected by the issue of new BP shares in exchange for Amoco common stock. BP shareholders will own 60% and Amoco shareholders 40% of the combined group.

BP and Amoco said the move was expected to deliver synergies from cost-savings that would add at least $2bn pre-tax a year by end 2000 to the earnings already separately targeted by the two companies.

The initial cost savings are expected to come from staff reductions in areas of overlap, streamlining of business processes, improved procurement and rationalisation where operations are duplicated, plus more focused exploration.

BP and Amoco have a combined chemicals capacity of over 22m tonne/year and the merger has major ramifications not just for their own, extensive operations but for the worldwide chemicals industry.

By: Neil Sinclair
+44 20 8652 3214

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