ChevronTexaco Announces Agreement to Acquire Unocal
April 04 2005 - 9:05AM
PR Newswire (US)
ChevronTexaco Announces Agreement to Acquire Unocal * Stock and
Cash Transaction Valued at $18 Billion SAN RAMON, Calif., April 4
/PRNewswire-FirstCall/ -- ChevronTexaco Corporation (NYSE:CVX) and
Unocal Corporation (NYSE:UCL) announced today that ChevronTexaco
would acquire Unocal in a stock and cash transaction valued at
approximately $18 billion, including net debt. The acquisition,
which is subject to approvals by Unocal shareholders and certain
regulatory agencies, will significantly enhance ChevronTexaco's
position as a leading global energy provider. "Unocal is a unique
independent with supermajor assets that are an excellent fit with
our existing portfolio and our long-term strategies -- to grow
profitably in core upstream areas, build new legacy positions and
commercialize our large undeveloped natural gas resource base,"
ChevronTexaco Chairman and CEO Dave O'Reilly said. "It is an
attractive transaction that provides value in both the near- and
long-term." "Over the past several years Unocal has been highly
successful in building a portfolio of major international and
deepwater assets and prospects," said Charles R. Williamson, Unocal
Chairman and Chief Executive Officer. "The combination with
ChevronTexaco will provide the financial and technical resources to
maximize the potential of these assets and prospects."
ChevronTexaco expects oil-equivalent production from the combined
portfolios during 2006 to average about 3 million barrels per day.
Unocal's 1.75 billion barrels of oil-equivalent proved reserves
would increase ChevronTexaco's reserve base as of the end of 2004
by about 15 percent. The resultant weighting of natural gas
reserves would increase by about 5 percentage points to roughly
one-third of the oil-equivalent total. ChevronTexaco expects the
transaction to be accretive to ChevronTexaco's prospective
production growth rate. Strong Strategic Fit ChevronTexaco
indicated the Unocal assets would provide an enhanced presence in
several of the company's core areas of operations, including: *
Asia Pacific -- The combination of the two companies will place
ChevronTexaco in the top tier of natural gas producers and
marketers in this expanding and strategically important region.
ChevronTexaco would become the top oil and gas producer in
Thailand. In Indonesia, extensive oil and gas producing operations
offshore in both the shelf and deepwater areas will augment
ChevronTexaco's significant oil production, principally onshore.
Unocal also markets through the Bontang LNG plant in Indonesia,
complementing ChevronTexaco's current LNG production in Australia,
as well as ChevronTexaco's planned development of natural gas
fields in the greater Gorgon area of Australia and the shipment of
LNG to markets in Asia and North America. * Gulf of Mexico -- The
acquisition will enhance ChevronTexaco's position in the Gulf of
Mexico, where it is already a leading participant on the shelf and
in deepwater opportunities such as Tahiti, Jack, Blind Faith and
Great White. This, when combined with Unocal's position on the
shelf, its interests in Mad Dog, St. Malo, K2 and Puma in the deep
water, and its portfolio of exploration acreage, will further
strengthen ChevronTexaco's Gulf of Mexico profile. * Caspian Region
-- The acquisition will give ChevronTexaco the second-largest
interest in the Azerbaijan International Operating Company (AIOC)
oil producing operations, broadening its status as a leading oil
company in the Caspian region. With AIOC comes a share in the
Baku-Tbilsi-Ceyhan (BTC) export pipeline, further expanding
ChevronTexaco's position in Caspian oil export infrastructure.
Synergy Opportunities O'Reilly said the company would target
synergies in a number of operations and corporate functions by
rationalizing duplicate activities and highgrading investment
programs. The integration process will focus on combining the
strengths of the two companies into a unified, high-performing
enterprise. For example, ChevronTexaco's proven expertise in
project execution, particularly in the deep water, will help
leverage the full value of Unocal's major developments. There will
also be opportunities to add value by adopting Unocal's operating
best practices in ChevronTexaco. ChevronTexaco expects disposition
of assets following the close of the transaction to result in
proceeds of more than $2 billion. Annual savings from operational
synergies and reduced corporate expenses are estimated by
ChevronTexaco at more than $325 million before tax. Terms of the
Acquisition The acquisition consideration is structured as 75
percent stock and 25 percent cash, providing an overall value of
approximately $62 per share based on the closing price of
ChevronTexaco stock on April 1. Unocal shareholders may elect to
receive either 1.03 shares of ChevronTexaco stock or $65 in cash
for each share of Unocal stock; however, both of these elections
will be subject to proration. In the aggregate, ChevronTexaco will
issue approximately 210 million shares of ChevronTexaco stock and
pay approximately $4.4 billion in cash. ChevronTexaco will also
assume estimated net debt of $1.6 billion. Effects on Future
Financial Results ChevronTexaco estimates the acquisition would be
accretive on a cash flow per-share basis. Further, it will be
broadly neutral to earnings per share after taking into account
synergies and significant additional share repurchases.
ChevronTexaco indicated plans for the repurchases, subject to board
approval and consistent with liquidity, legal requirements, and
maintaining the company's AA credit rating. Over the past year,
ChevronTexaco repurchased $2.8 billion of its common shares, as
part of a $5 billion repurchase program. Integration Timetable
Following regulatory approval, the full integration of the two
companies is expected to be completed in six months. "We have very
strong integration capabilities following the merger of Chevron and
Texaco and intend to combine operations and achieve synergies
quickly and efficiently," O'Reilly said. "At the same time, we
remain strongly focused on enhancing our existing base business and
increasing global production through development of our strong
queue of capital projects. "ChevronTexaco and Unocal share common
roots in the oil fields of California and we believe we have highly
compatible business cultures and values. A very attractive element
of this combination is the opportunity to integrate two highly
capable groups of employees to continue to drive world-class
performance," O'Reilly said. Williamson said, "In our discussions
with ChevronTexaco it is clear that we share similar values and
have comparable corporate cultures. This merger will be a good
fit." O'Reilly concluded by saying, "The immediate benefits of this
combination are tangible and the longer-term value is even more
compelling. We believe it will significantly enhance our company's
position as a leading competitor and the partner-of-choice in the
global energy industry." Lehman Brothers is acting as financial
advisor to ChevronTexaco Corporation. Pillsbury Winthrop Shaw
Pittman LLP is acting as legal advisor. Morgan Stanley & Co.
Inc. is acting as financial advisor to Unocal Corporation.
Wachtell, Lipton, Rosen & Katz is acting a legal advisor to
Unocal. About ChevronTexaco ChevronTexaco Corporation is one of the
world's leading energy companies. With more than 47,000 employees,
ChevronTexaco subsidiaries conduct business in approximately 180
countries around the world, producing and transporting crude oil
and natural gas, and refining, marketing and distributing fuels and
other energy products. ChevronTexaco is based in San Ramon, Calif.
More information on ChevronTexaco is available at
http://www.chevrontexaco.com/. About Unocal Unocal is one of the
world's leading independent natural gas and crude oil exploration
and production companies. With more than 6,000 employees, the
company's principal oil and gas activities are in Asia and North
America. Unocal has no refining or marketing operations. Investors
Note: A conference call to follow-up on the announcement of this
agreement will take place this morning, Monday, April 4, 2005, at
6:00 a.m. PDT. A Webcast of the meeting will be available in a
listen-only mode to individual investors, media and other
interested parties on ChevronTexaco's Web site at
http://www.chevrontexaco.com/ under the "Investors" heading and at
(973) 582-2734. Media Note: A conference call for media with
ChevronTexaco Chairman and CEO along with Unocal Chairman and CEO,
providing more details on the acquisition will take place this
morning, Monday, April 4, 2005 between 7:30 a.m. and 8:00 a.m. PDT.
The call-in number is (973) 582-2757. CAUTIONARY STATEMENTS
RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF "SAFE
HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995 Except for the historical and factual information contained
herein, the matters set forth in this press release, including
statements as to the expected benefits of the acquisition such as
efficiencies, cost savings, market profile and financial strength,
and the competitive ability and position of the combined company,
and other statements identified by words such as "estimates,
"expects," "projects," "plans," and similar expressions are
forward-looking statements within the meaning of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are subject to risks and
uncertainties that may cause actual results to differ materially,
including required approvals by Unocal shareholders and regulatory
agencies, the possibility that the anticipated benefits from the
acquisition cannot be fully realized, the possibility that costs or
difficulties related to the integration of Unocal operations into
ChevronTexaco will be greater than expected, the impact of
competition and other risk factors relating to our industry as
detailed from time to time in each of ChevronTexaco's and Unocal's
reports filed with the SEC. You should not place undue reliance on
these forward-looking statements, which speak only as of the date
of this press release. Unless legally required, neither
ChevronTexaco nor Unocal undertakes no obligation to update
publicly any forward-looking statements, whether as a result of new
information, future events or otherwise. ADDITIONAL INFORMATION
ChevronTexaco will file a Form S-4, Unocal will file a proxy
statement and both companies will file other relevant documents
concerning the proposed merger transaction with the Securities and
Exchange Commission (SEC). INVESTORS ARE URGED TO READ THE FORM S-4
AND PROXY STATEMENT WHEN THEY BECOME AVAILABLE AND ANY OTHER
RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. You will be able to obtain the documents
free of charge at the website maintained by the SEC at
http://www.sec.gov/. In addition, you may obtain documents filed
with the SEC by ChevronTexaco free of charge by contacting
ChevronTexaco Comptroller's Department, 6001 Bollinger Canyon Road
- A3201, San Ramon, CA 94583-2324. You may obtain documents filed
with the SEC by Unocal free of charge by contacting Unocal
Stockholder Services at (800) 252-2233, 2141 Rosecrans Avenue,
Suite 4000, El Segundo, CA 90245, e-mail: . ChevronTexaco, Unocal,
and their respective directors and executive officers, may be
deemed to be participants in the solicitation of proxies from
Unocal's stockholders in connection with the merger. Information
about the directors and executive officers of ChevronTexaco and
their ownership of ChevronTexaco stock is set forth in the proxy
statement for ChevronTexaco's 2005 Annual Meeting of Stockholders.
Information about the directors and executive officers of Unocal
and their ownership of Unocal stock will be set forth in the proxy
statement for Unocal's 2005 Annual Meeting of Stockholders.
Investors may obtain additional information regarding the interests
of such participants by reading the Form S-4 and proxy statement
for the merger when they become available. Investors should read
the Form S-4 and proxy statement carefully when they become
available before making any voting or investment decisions.
DATASOURCE: Unocal Corporation CONTACT: Don Campbell of
ChevronTexaco, +1-925-842-2589 Web site:
http://www.chevrontexaco.com/
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