The Federal Trade Commission on Thursday
unanimously approved BP Amoco PLC's $27.6 billion purchase of
Atlantic Richfield Co. after the company agreed to sell Arco's
Alaskan large oil holdings.
The merger, approved by the commission in a 5-0 vote, will
create one of the world' largest oil companies. The company said it
would move swiftly to conclude the acquisition.
The approval requires BP Amoco to sell all of Arco's oil
holdings in Alaska within 30 days to resolve anticompetitive
problems. The FTC had opposed the merger because of concern that
the combination, without such divestitures, would dominate the West
Coast oil market.
BP Amoco already has agreed tentatively to sell the holdings to
Phillips Petroleum Co.
"The sweeping wholesale divestitures called for by the consent
order resolve the competitive concerns that initially led the
commission to seek a preliminary injunction to block the proposed
transaction," Richard Parker, director of the FTC's Bureau of
Competition, said in a statement.
BP Amoco's chairman, Sir John Browne, said he was "very
pleased" at the FTC's action.
"We will now close the deal and rapidly implement the plans we
have in place to integrate our operations worldwide," he said in a
statement. "We intend to move quickly to deliver the significant
value of this union to the shareholders of the new group."
BP Amoco, based in London, had been in tense negotiations with
the FTC for months to try to work out an arrangement that would
resolve the federal agency's concerns about competition.
BP Amoco and Arco, which is based in Los Angeles, together
control about 70 percent of the oil production on Alaska's North
Slope, and FTC lawyers argued such dominance would be
anticompetitive and influence retail prices in the West Coast
The merger creates the second largest nongovernment oil company
in world behind Exxon Mobil Corp., a merger that received FTC
approval last November.
The FTC in early February moved to block the merger in federal
court, arguing that it would violate federal antitrust laws because
of the company's market dominance in Alaska. That move, prompted
additional concessions by BP Amoco, including the divestitures that
led to Thursday's approval.
"With limited exception the divestitures must take place within
30 days," said the FTC in a statement.
The sale of Arco's Alaska holdings will mean that the new
company will continue to control about 45 percent of the oil
production on the North Slope. BP Amoco, under the consent
agreement, also must sell some pipeline and oil storage holdings in
Once the merger goes through, Arco shareholders, who own 329.6
million shares of stock, would get 1.64 shares of BP Amoco for each
share they hold.
Shares of BP Amoco were trading Tuesday down 75 cents to $51.37 1/2
on the New York Stock Exchange, where shares of Arco were down 31 1/4
cents to $83.87 1/2.