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New Exxon Mobil Organizing, Advertising

December 6, 1999
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New Exxon Mobil Organizing, Advertising

At the corporate level, the union completed last week by Exxon and Mobil wants to be known as Exxon Mobil Corp. But at the subsidiary level things get more intimate. ExxonMobil --- so close that not even a hyphen can separate the names of what once were rivals --- is the chosen moniker for the energy giant's many and various business units.

Last week saw the completion of one of the industry's most talked about mega-mergers and the trickling out of plans for how the combined company will be organized. At the same time Exxon Mobil Corp.'s CEO intimated things look even better than originally thought on the cost savings side.

Exxon Mobil launched a new organizational structure of 11 separate global businesses designed to allow the company to compete more effectively in a changing worldwide energy industry. The company also launched a global advertising campaign intended to let people know it wants to be No. 1 in petroleum and petrochemicals.

Last week the U.S. Federal Trade Commission (FTC) approved the $81 billion merger of the companies. "The FTC's decision, coupled with the European Commission's approval gained earlier, cleared the way for the merger to proceed. Exxon and Mobil moved quickly to close the transaction and to launch the world's premier petroleum and petrochemical company, which will be known as Exxon Mobil Corp., incorporated in New Jersey," said Exxon Chairman Lee Raymond. "The merged company expects that the scale of the worldwide near-term cost savings and the long-term strategic benefits will likely exceed those announced last year. The merger will allow Exxon Mobil to compete more effectively with the recently combined multinational oil companies and the large state-owned oil companies that are rapidly expanding outside their home areas."

Raymond said by mid-December the company will announce a revised forecast of merger benefits that will likely exceed the $2.8 billion annual level announced last year. Regarding the synergy benefits the companies announced in December 1998 Raymond said, "At that time, we announced an expectation that the near-term benefits would total $2.8 billion annually, on a pre-tax basis. Since that time, our business transition teams have done a lot more planning and analysis around how to combine the two companies and, at the same time, reorganize how we manage the business-with a clear goal of maximizing the company's overall performance."

Raymond said the Dec. 1, 1998 projection of a worldwide reduction in workforce of about 9,000 may also be revised in the new forecast. Exxon Mobil's corporate headquarters are up and running in Irving, TX. The board of directors has taken all the necessary actions to complete the merger. Each of the functional business line headquarters offices in Houston and Fairfax are in operation, and organizational plans have been developed for regional centers and other key office locations.

Five global upstream companies-Exploration, Development, Production, Gas Marketing and Upstream Research-will be headquartered in Houston along with the Chemical company and the Coal and Minerals company. Four downstream companies-Fuels Marketing, Lubricants & Petroleum Specialties, Refining & Supply, and Research and Engineering-will be based in Fairfax, Virginia.

Exxon Mobil has a presence in nearly 200 countries. The company has exploration or production operations in some 50 countries. The company sells fuels and chemicals in about 120 countries and lubes in almost 200. Major manufacturing facilities for these products are strategically located in 24 countries. Mobil brings major liquefied natural gas (LNG) assets and experience to the combined company, complementing Exxon's gas assets and gas-to-liquids technology.

In related merger news, Exxon Mobil agreed to sell Exxon's Northeast and Mobil's Mid-Atlantic service stations and supply arrangements to Tosco Corp. The agreement also gives Tosco the right to acquire Mobil's Manassas, VA, terminal and undeveloped properties intended for service station use in the Northeast and Mid-Atlantic regions. The sale involves 1,740 service stations from Virginia through Maine, including 686 owned or leased properties and the assignment of contracts covering some 1,054 dealer and distributor sites.

The purchase price of about $860 million plus land-bank sites and terminal will be financed with available cash and debt. Tosco does not anticipate issuing additional equity.

The assets and supply arrangements involved in the Tosco sale satisfy the conditions required by the Federal Trade Commission and states who signed a parallel consent order approving the merger. The FTC gave the go-ahead for Exxon and Mobil to merge Nov. 30. Terms of the deal between Exxon Mobil and Tosco require regulatory approval. Joe Fisher, Houston

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ISSN © 2577-9877 | ISSN © 1532-1266
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