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WASHINGTON -- Shell Oil Co. plans to complete its purchase of Pennzoil Quaker State Co. tomorrow after the $1.8-billion deal won approval from federal regulators.
The Federal Trade Commission (FTC) approved the acquisition late Friday, clearing the way for Shell Oil to acquire the nation's largest maker of motor oil and parent of the Jiffy Lube service stations.
"The company expects the transaction to be completed on Oct. 1.," according to a statement issued by Shell in Houston, where both companies have their headquarters.
The FTC conditioned its approval, however, on Pennzoil selling its interest in a company that makes the feedstock used in high-performance motor oil, saying the cost of such motor oil would otherwise probably increase because of the lack of competition. The companies have agreed to the required divestitures.
Pennzoil Quaker State will be combined with Shell's lubricants unit. The new company will then become a wholly owned subsidiary of Shell Oil Co., which in turn is a division of Royal Dutch/Shell Group.
The merger is expected to result in the loss of about 1,230 jobs, or about 15 percent of the current work force, as the two companies combine overlapping operations, according to company executives. Pennzoil Quaker State has about 7,400 workers worldwide, while the Shell lubrication unit employs about 800.
Pennzoil Quaker State is the country's leading producer of motor oil, including the popular Pennzoil and Quaker State brands, both of which will survive the merger. It also is owner or franchisee of more than 2,150 Jiffy Lube service centers around the country.
The acquisition will give Shell three of the top five domestic motor oil brands. It also produces the Havoline brand motor oil.