Philips Petroleum Co. to purchase the Tosco Corp. for 0.52 times revenue, The

Weekly Corporate Growth Report, Feb 12, 2001

The Deal: The Phillips Petroleum Co. has agreed to purchase the Tosco Corp. for $7.49 billion in stock. The deal will make Phillips the second-largest refiner in the country. The acquisition will also make the company the nation's fifth-largest gasoline retailer, based on the number of the stations, and the third-largest in terms of volume of gas sold. Phillips will also assume $2 billion of Tosco debt. After the news of the transaction was announced, shares of Tosco inched up 62 cents to $34.61, while Phillips shares rose just 9 cents to close at $58.13.

Discussion: The Tosco Corp. is the leader of the pack of independent United States oil refining and marketing companies, ahead of Ultramar Diamond Shamrock and Sunoco. The company's Circle K unit is the No. 2 convenience store chain in the United States. The company includes about 2,000 company-controlled stores, mainly in the Sunbelt. Tosco operates more than 4,500 other service stations and convenience stores throughout the United States under the BP,76, Exxon and Mobil brands.

The Phillips Petroleum Co. explores for, produces, refines, transports and markets oil and natural gas. With properties in 20 countries, Phillips is one of the United State's largest integrated oil companies; it has nearly doubled its proved reserves to 4.1 billion barrels of oil equivalent by acquiring

ARCO's Alaska properties as part of the BP Amoco/ARCO merger. The company has merged its gas gathering and processing business with that of Duke Energy, and it has combined its chemicals division with that of Chevrons.