$3.9 Billion Buys Equilon, Motiva


With final approval from the U.S. Federal Trade Commission, a trustee on Feb. 13 completed its sale of Texacos shares in the Equilon and Motiva partnerships to Shell Oil Co. and Saudi Refining Inc.

The sale, for $2.26 billion in cash and assumption of $1.6 billion in liabilities, meets the FTCs biggest condition for its approval of the Chevron-Texaco merger, which went into effect Oct. 9. It also raises the curtain on Shells efforts to refashion its downstream operations in the United States.

Before being acquired by Chevron, Texaco owned 44 percent of Equilon, which combined Shell’s and Texacos refining, marketing and transportation operations in the western and midwestern United States. Texaco also held a 32.5 percent share in Motiva, which combined the eastern and Gulf Coast refining and marketing operations of Shell, Texaco and Saudi Refining.

Shell, which owned 56 percent of Equilon and 30 percent of Motiva, assumed sole ownership of Equilon and renamed it Shell Oil Products U.S. Motiva is now a 50-50 joint venture between Shell and Saudi Refining, which previously owned a 35-percent share. Many observers expect Shell to manage the Motiva operations.

Shell and Saudi Refining have yet to announce detailed plans for the lubricant operations involved in the purchase, but Shell has undertaken an initiative to rebrand Texaco service stations under the Shell name. Shell said it expects to convert the vast majority of 13,000 Texaco stations.

Under terms of the deal, Shell and Saudi Refining have an exclusive right until 2004 to use the Texaco brand to market products and services at those stations. The right will then continue on a non-exclusive basis until 2006.

Shell and Saudi Refining also have non-exclusive rights to market lubricants under the Havoline brand for 18 months.

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