No agreement yet on Shell-Texaco downstream deal
Texaco Inc. has yet to agree on a price for the sale of its US joint venture downstream assets with its partners, but Texaco expects the proposed merger with Chevron Corp. will close on schedule. A Texaco spokesman told OGJ Online Friday that the Chevron-Texaco merger is expected to be completed by October.
HOUSTON, June 1 -- Texaco Inc. has yet to agree on a price for the sale of its US joint venture downstream assets with its partners, but Texaco expects the proposed merger with Chevron Corp. will close on schedule.
Texaco spokesman Paul Weeditz told OGJ Online Friday, "We remain confident that we will be able to close within the timeframe set out when the merger was announced, within 12 months."
Chevron and Texaco announced their merger plans in October 2000. The merger is based on a stock acquisition valued at about $35 billion (OGJ, Oct. 23, 2000, p. 28).
Units of the Royal Dutch/Shell Group Shell and Saudi Aramco are expected to buy Texaco's interests in Equilon Enterprises LLC and Motiva Enterprises LLC. Discussions have been ongoing for months and are continuing, both Shell and Texaco confirmed.
The US Federal Trade Commission not decided if any assets will have to be divested, but the Texaco spokesman said Texaco and Chevron "have recognized for some time there is a likelihood some refining assets will have to be divested to meet FTC requirements."
If Texaco fails to negotiate a deal with Shell and Saudi Aramco by the time shareholders vote on the Chevron-Texaco merger, then the merger still could be completed provided Texaco places its stake in the downstream joint ventures in a trust, Weeditz said.
"There remains a big gap in respective valuations of our interests. We are looking for fair market value, and Shell has not offered that," he said.
A Shell spokeswoman said, "Shell and Saudi Aramco believe we have made a fair offer for Texaco's interest."
Equilon and Motiva were created in 1998 by the combination of the US refining and marketing businesses of Shell Oil Co., Texaco, and Star Enterprises -- a joint venture between Texaco and Saudi Refining Inc (SRI). Shell and Texaco own 56% and 44%, respectively, of Equilon. Shell, Texaco, and SRI own about a third each of Motiva.
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