ChevronTexaco to buy rival Unocal
California oil companies plan to merge in $16.4 billion deal
San Ramon, Calif. ? ChevronTexaco Corp., the nation’s second largest oil company, is buying smaller rival Unocal Corp. for about $16.4 billion, hoping to further accelerate its already surging profits by boosting its energy supplies in Asia.
The deal announced Monday proposes to unite San Ramon, Calif.-based ChevronTexaco, which trails only Exxon Mobil Corp. in the U.S. oil business, with El Segundo, Calif.-based Unocal, the nation’s ninth biggest oil and gas production company.
With histories dating back to the late 19th century, the two companies once competed in the West Coast gasoline market, but that rivalry ended nearly a decade ago when Unocal sold its retailing and refining assets for $2 billion.
ChevronTexaco initially valued its acquisition price, consisting of stock and cash, at $62 per share, nearly 4 percent below Unocal’s market value before the deal was announced.
The offer disappointed investors, who had driven up Unocal’s stock by 20 percent since the media reported ChevronTexaco’s was discussing a takeover a month ago.
Unocal’s shares fell $4.75, or 7.4 percent, to close at $59.60 Monday on the New York Stock Exchange, while ChevronTexaco’s shares fell $2.33, or 3.9 percent, to finish at $56.98.
Unocal shares rose 3 cents to $59.63 in after-hours trading.