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Friday, 14 April, 2000, 05:43 GMT 06:43 UK
Green light for BP-Arco merger
Arco refinery
Arco: Sale of its assets has hindered merger
BP Amoco has won clearance from authorities in the United States for its merger with Atlantic Richfield Co (Arco).

The $27.6bn (17.25bn) deal, originally agreed a year ago, has been given the go-ahead by the Federal Trade Commission.

It will create a combined group with a market capitalisation of about $200bn.

BP Amoco chief executive Sir John Browne said: "We are very pleased to have received FTC approval. We will now close the deal and rapidly implement the plans we have in place to integrate our operations worldwide.
Sir John Browne, BP
Sir John Browne: Keen to move fast

"We intend to move quickly to deliver the significant value of this union to the shareholders of the new group."

BP Amoco and Arco said they plan to close the transaction at 0800 BST on 18 April. The last day of trading in Arco stock will be 17 April.

The merger had been held up because of complex negotiations concerning the operation of the Prudhoe Bay gas and oil field in Alaska, North America's largest.

ExxonMobil had issued a lawsuit against BP, Arco and Phillips Petroleum.

This had prevented the sale of Arco's assets to Phillips, a condition set by the FTC for the merger with BP.

The companies have now reached an agreement in principle, under which ExxonMobil will have a 36.8% stake in Prudhoe Bay, Phillips will have 36.5% and BP gets 26.7%.

Under the deal, BP Amoco will also remain the sole operator.

'Difficult' transaction

But while the approval from the FTC will bring some relief to BP Amoco, the prolonged merger is reported to have cost it $10bn.

"There's no question the Arco acquisition was much more difficult that anybody anticipated going into the transaction," said Michael Young, an analyst with Deutsche Banc Alex.Brown.

"Clearly, it has exacted a toll on the company's reputation."

BP has had a long battle with federal authorities to persuade them that the merger would not give it too much control of the Alaskan oil fields.

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14 Mar 00 | Business
BP buys Burmah Castrol
02 Feb 00 | Business
BP deal for Arco blocked
01 Apr 99 | The Economy
Lubricating the oil industry
31 Mar 99 | The Company File
Oil merger fever
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