Daily GPI / NGI All News Access

Chevron and Texaco? Maybe, Maybe Not

Chevron and Texaco? Maybe, Maybe Not

Merger rumors that tweaked the stock prices of Chevron and Texaco have cooled somewhat. While the industry awaits word of a deal (or no deal), observers might consider the words of management and economics professor Lester Thurow.

"Once a company is in play, Wall Street arbitrageurs can drive the deal." Thurow, a Massachusetts Institute of Technology professor who gave the keynote address at GasMart/Power in Dallas last week, told NGI merger talk can turn to merger action as companies are forced to respond to the Street. Obviously, this is one reason why the first chorus of every merger ballad is "no comment."

Word of a Chevron-Texaco pairing hit the market May 7, causing a drop in the shares of presumed acquirer Chevron and a rise in Texaco shares. Market action last Monday saw Chevron rise and Texaco drop. Among obstacles to a deal (expected to value Texaco at about $42 billion) are the questions of who would head a combined company and the expectation Texaco would surely have to exit some of its U.S. refining and marketing joint ventures with Shell to appease regulators.

At the Howard Weil Energy Conference in New Orleans in April, Texaco CEO Peter Bijur said his company had not ruled out a merger or acquisition. He told attendees the Texaco of the future will be heavily into high-tech services and be a "high solutions provider." Bijur said technology and knowledge base are becoming more important than the resource base (see NGI April 19, 1999).

As recently as two weeks ago, Bijur publicly disavowed any merger plans and made a strong case that it is not necessary to grow larger in order to survive. In his GasMart/Power speech, however, Thurow said only the largest multinational companies will survive globalization, and midsize national companies won't make it. Texaco and Chevron combined would be about half the size of Shell, currently the third largest major behind Exxon and BP Amoco.

Not surprisingly, neither company was commenting last week.

©Copyright 1999 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

ISSN © 2577-9877 | ISSN © 1532-1231
Comments powered by Disqus