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    Shareholders Approve Chevron/Texaco Merger

    Deal completed yesterday after Texaco reached agreements with Shell and Saudi Refining to divest venture companies.


    Texaco Inc. is selling its interests in two convenience store and refinery joint ventures to Shell Oil Co. and Saudi Refining Inc. for about $2.1 billion, paving the way for completion of Texaco's $38 billion sale to Chevron Corp. Immediately following that deal, shareholders of Chevron and Texaco voted to approve the merger of the giant oil companies.

    Under the deals, Shell and Saudi Refining Inc. are buying the Texaco stake in the joint ventures and would assume responsibility for about $1.7 billion in debt and other liabilities, Reuters reported. The deals would give Houston-based Shell sole ownership of Equilon Enterprises LLC, which operates about 4,500 Shell stations and 4,500 Texaco stations, primarily in the western United States.

    Equilon, formed in 1998, also operates four refineries, a lubricants business and a pipeline and terminal network.

    The other divestiture would give Shell and Saudi Refining Inc., a subsidiary of Aramco Services Co., equal interest in Motiva Enterprises LLC. Motiva, also formed in 1998, operates mostly in the east and includes nearly 4,800 Shell stations and about 8,200 Texaco stations, four refineries and a network of terminals.

    The Federal Trade Commission required the sale of Texaco's stakes in the joint ventures as a condition of its recent approval of the Chevron-Texaco merger pact, which was announced a year ago, the report said.

    Chevron is already the world's fifth-largest oil company by market value, and will remain so with Texaco on board, but its new market capitalization of close to $100 billion will push it into the leading group of giant oil companies headed by Exxon Mobil Corp., Shell, BP Plc and TotalFina Elf SA.

    Impressive Cost Savings
    Estimates of the Equilon and Motiva divestitures had ranged widely from $2.5 billion to as high as $7 billion because analysts found it hard to value a set of assets for which there was only one viable buyer. By 2004, Shell hopes to increase U.S. business net earnings to $1 billion from a current $450 million.

    The company will achieve some of those savings by cutting 10 percent, or 1,250 of Equilon's and Motiva's employees. That figure excludes 10,000 convenience store employees.

    Shell also said that it is now be the biggest gasoline retailer in the United States, with just short of 15 percent of the market.

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