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. Last Updated: 07/27/2016

Exxon Seals $77.2 Billion Mobil Deal




NEW YORK -- Exxon Corp. agreed Tuesday to its much-anticipated $77.2 billion purchase of Mobil Corp., the costliest merger of all time to create the world's largest oil company.


The combination of the nation's two biggest oil and gas companies will be called Exxon Mobil Corp. and would vault past Royal Dutch-Shell Group as the world's biggest energy company. It also would surpass General Motors Corp. as the largest U.S. company of any kind, with $203 billion in combined revenue last year.


The deal comes as oil companies are struggling with a deep slump in prices that is not expected to turn around for years.


Exxon and Mobil expect $2.8 billion in savings by merging, but did not mention any job cuts in a statement announcing the deal.


Analysts expect thousands of employees will lose their jobs, with estimates running as high as 20,000, thor 16 percent of the companies' combined work force of 123,000.


"This merger will enhance our ability to be an effective global competitor in a volatile world economy and in an industry that is more and more competitive," the companies said in a joint statement.


The Exxon-Mobil deal tops British Petroleum's planned $58.5 purchase of Amoco Corp. as the largest industrial merger of all time and, at current stock prices, outranks Bell Atlantic Corp.'s $72 billion merger with GTE Corp. and the $70 billion union between SBC Communications Inc. and Ameritech Corp.


The deal brings together two of the biggest pieces of John D. Rockefeller's Standard Oil trust, the oil monopoly broken up by the U.S. government nearly 90 years ago. Mobil is the former Standard Oil of New York, while Exxon was once Standard Oil of New Jersey.


Exxon and Mobil will retain both of their well-known brand names, although analysts are expecting government regulators to force the companies to sell off numerous gas stations and refineries to satisfy antitrust concerns.


The two companies have about 47,000 gas stations worldwide, roughly a third in the United States, and exploration and production operations worldwide.


Even though Exxon Mobil would rank as the world's biggest oil company, most analysts feel the industry is competitive enough that concerns about market dominance will not be strong enough for regulators to kill the deal.


The Federal Trade Commission could, however, be troubled by the companies' total share of U.S. gasoline sales, which was about 20 percent last year, according to the trade publication National Petroleum News.


Analysts believe regulators will surely aim at reducing the companies' concentration of gas stations in the Northeast, particularly in New York and New Jersey.


Other regions of concern could be the Southwest and the West Coast, where the companies may have to sell stations and refineries.


Regulators also will likely seek sales of some stations in Europe, where Mobil is already involved in a joint venture with British Petroleum, analysts said.


The companies could also be forced to trim their strong businesses in motor oil and other lubricants.


The company will be based at Exxon's headquarters in Irving, Texas. Its refining and marketing operations will be based in Mobil's hometown of Fairfax, Virginia, while exploration, production and chemical operations will have their headquarters in Houston.


Exxon chairman Lee Raymond will be chairman, chief executive and president of the new company.


Mobil boss Lucio Noto will serve as vice chairman.