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Government Approves BP Amoco's
Purchase of Atlantic Richfield

By H. Josef Hebert   Associated Press
WASHINGTON — 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 gasoline market.

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 Cushing, Okla.

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.

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