Exhibit 2 (a)
[LOGO] Amoco Corporation
Mail Code 2304
200 East Randolph Drive
Chicago, Illinois 60601-7125
Jim Fair For Immediate Release
Manager, Communications Services
Phone: 312-856-5566
Internet: www.amoco.com
BP AND AMOCO MERGE TO ENTER
GLOBAL TOP TRIO OF OIL MAJORS
Largest ever industrial merger creates Britain's
biggest company
Combined current market capitalization of some $110
billion, with size and scale to access biggest projects for
future growth
Agreed equity split of 60 per cent to BP and 40 per
cent to Amoco
Run by chief executive Sir John Browne and integrated
management team
Target of at least $2 billion extra to annual pre-tax
earnings by end-2000
Aims for strong annual growth and top competitive
returns
Prime positions in key producing areas, retail markets,
petrochemicals and emerging regions.
Chicago (August 11) - BP and Amoco today announced that they
have agreed to join forces to create one of the strongest
and most competitive international energy and petrochemicals
groups in the world.
The two companies intend to unite their global operations
through an agreed merger. The executive management of the
new group will be headed by BP chief executive Sir John
Browne and the board will be co-chaired by BP chairman Peter
Sutherland and Amoco chairman Larry Fuller.
The combined enterprise, which is the largest ever
industrial merger, will be called BP Amoco p.l.c. It will
be headquartered in London and will be Britain's biggest
company.
BP's earnings in 1997 were $4.6 billion and Amoco's totaled
$2.7 billion. Combined revenues were $108 billion and
capital employed $53 billion. Current combined market
capitalization of some $110 billion would take the united
group into the world's top trio of oil majors.
Sir John Browne described the BP-Amoco link-up as "a superb
alliance of equals with complementary strategic and
geographical strengths which effectively creates a new super-
major that can better serve our millions of customers world-
wide".
In a joint statement following approval of the transaction
by the boards of BP and Amoco, he and Larry Fuller said the
move was expected to deliver synergies from cost-savings
that would add at least $2 billion pre-tax a year by end-
2000 to the earnings already separately targeted by the two
companies - and possible upside beyond that.
"We are uniting two excellent portfolios of assets and
people to create a group that will have the financial
resources, scale and global reach to compete effectively in
the 21st century," they said.
DISTINCTIVE RETURN: "International competition in the
industry is already fierce and will grow more acute as new
players emerge. In such a climate the best investment
opportunities will go increasingly to companies that have
the size and financial strength to take on those large-scale
projects that offer a truly distinctive return."
The merger will be effected by the issue of new BP shares,
in the form of American Depository Receipts, in exchange for
Amoco common stock, with BP shareholders owning 60 per cent
and Amoco shareholders owning 40 per cent of the combined
group. The board of BP Amoco will comprise 13 directors from
BP, of whom six will be executive directors, and nine
directors from Amoco, of whom two will be executive
directors.
Sir John Browne will be CEO of BP Amoco. He will also be
chairman of the management committee and Larry Fuller deputy
chairman. The two will co-chair the transition team
responsible for integrating the operations of the new group.
BP deputy CEO Rodney Chase and Amoco president Bill Lowrie
will be deputy CEOs and presidents of BP Amoco. Mr. Chase
will have responsibility for exploration & production and
Mr. Lowrie for refining & marketing, and chemicals. BP chief
financial officer John Buchanan will be CFO. As co-chairman
of the new group, Mr. Fuller will remain an executive
director until his retirement in the first half of 2000.
The world-wide headquarters of the BP Amoco group will be in
London. Amoco's head office in Chicago will be headquarters
for the group's North American refining, marketing and
transportation business and, in due course, the world-wide
chemicals business.
AMOCO BRAND: Exploration and production operations for the
Western Hemisphere will be managed from Houston, Texas,
where both BP and Amoco currently have offices. The Amoco
brand will be extended over time to all BP's retail gasoline
and convenience store outlets in the US. Retail sites
elsewhere in the world will continue to carry the BP brand.
The initial synergies of $2 billion from the transaction are
expected to come from a mix of reductions in staff in areas
of overlap, more focused exploration, streamlining of
business processes, improved procurement and rationalization
where operations are duplicated.
The BP Amoco group will have combined reserves of around
14.8 billion barrels of oil and gas equivalent and daily
production of some three million barrels. It will have prime
positions in established major oil and gas provinces of the
world, including the North Sea and North America. It will be
the largest producer of oil and gas in the US, with output
from Alaska, the Gulf of Mexico and the Lower 48 states.
Amoco is already the biggest gas producer in the US and
Canada.
It will have key positions and enhanced opportunities for
access to new acreage in regions expected to supply a
growing share of global energy demand in the 21st century.
These include Algeria, Angola, Argentina, Australia,
Azerbaijan, Bolivia, Canada, Colombia, Egypt, Kazakhstan,
Kuwait, Norway, Oman, Russia and Siberia, Trinidad, the UAE
and Venezuela.
TOP MARKETER: Amoco is one of the leading gasoline marketers
in the US and a market-leader in premium gasoline. Based on
1997 sales, the new group will share top place for retail
sales east of the Rocky Mountains, with first or second
position in some 20 states. World-wide, it will be a top-
tier marketer of fuels, served by a global refining network
with key refineries among the top performers in their
regions.
Combining the chemicals operations of BP and Amoco will
create a business with revenues of some $13 billion that
marries the strengths of BP in Europe and Amoco in the US,
and provides a powerful platform for expansion in Asia where
both companies already have significant investments.
The new chemicals business will be one of the world's
largest petrochemicals companies, with leading positions in
seven core products - acetic acid, acrylonitrile, aromatics,
purified terephthalic acid (PTA), alpha-olefins, purified
isophthalic acid (PIA) and polypropylene - and a portfolio
of key proprietary technologies.
Both BP and Amoco have significant investments in solar
energy and share strong records and reputations for sound
operating practices, and environmental and social
responsibility.
FIRST-CLASS PEOPLE: Concluding their joint statement on the
new group, Sir John Browne and Larry Fuller said: "Through
this transaction, we are creating an energy business for the
new millennium, a business that has the first-class people,
the financial resources and the leading-edge technology to
supply our millions of customers world-wide with cleaner,
premium-quality products at competitive prices.
"The managements of BP and Amoco already have a shared
financial philosophy. The targets our two companies have
previously set are very similar - powerful annual earnings
growth, a strongly-competitive return on capital, and
dividends growing in line with underlying earnings. This
transaction gives us the financial strength, flexibility and
global reach to pursue growth opportunities that will
underpin those targets and to extend them over the longer
term."
A summary of the proposed merger agreement is set out in
Part lll of this release. The companies said they intend to
publish detailed information for dispatch to shareholders
within the next three months. Subject to shareholder
approval and regulatory consents, the conclusion of the
merger is targeted for the end of the year.
Investment bank advisers are J P Morgan for BP and Morgan
Stanley for Amoco.
August 11, 1998
Safe Harbor Language Regarding Forward Looking Statements:
The statements contained in this press release,
particularly those regarding synergies, performance, costs,
dividends, returns, divestments, reserves and growth are or
may be forward looking statements and actual results may
differ materially from the statements made depending on a
variety of factors, including successful integration of BP
and Amoco operations.
Additional information concerning factors that could
cause the actual results to differ materially from those in
the forward looking statements are contained in BP's Annual
Report on Form 20-F and Amoco's Annual Report on Form 10-K
filed with the US Securities and Exchange Commission.
CONTACTS FOR FURTHER INFORMATION
BP LONDON AMOCO CHICAGO
Roddy Kennedy - Press Office Jim Fair - Media Relations
Tel: 44 (0)171 496 4624 Tel: (1) 312-856 5566
David Peattie - Investor Relations Chuck Koepke - Investor Relations
Tel: 44 (0)171 496 4717 Tel: (1) 312- 856 6431
BP AMERICA AMOCO LONDON
Tom Koch - Press Office Harry MacMillan - Public Affairs
Tel: (1) 212 451 8019 44 (0)181 849 7271
Terry Lamore - Investor Relations
Tel: (1) 212 451 8034
BROKER CONTACTS
FOR BP FOR AMOCO
Rod Peacock - J P Morgan London Gordon Dyal - Morgan Stanley
Tel: 44 (0)171 325 5664 Tel: (1) 212 761 4457
Harry Hampson - J P Morgan London
Tel: 44 (0)171 325 5536
Jes Staley - J P Morgan New York
Tel: (1) 212 648 0069
Stephen Robinson - Merrill Lynch, London
Tel: 44 (0)171 772 2608
Mike Ryan - Merrill Lynch, New York
Tel: (1) 212 449 3697
David Mayhew - Cazenove & Co
Tel: 44 (0)171 825 9453
Satellite feed today, August 11th, of executive comments and
Amoco B-roll:
Times of feed: 2:45 p.m. to 3:00 p.m. EDT
3:45 p.m. to 4:00 p.m. EDT
Satellite coordinates: C-Band, Galaxy 6/Transponder 5
Part ll
FACTS AND STATISTICS
The BP Group
1997 replacement cost pre-exceptional earnings of $4.6
billion
1997 revenues exceeding $71 billion
Capital employed in 1997 was $30.7 billion
Capital budget for 1998 of $6 billion
Some 56,450 employees world-wide at end-1997
In business since 1909
Over 375,000 shareholders.
Exploration & Production
1997 world-wide net production of over 1.25 million
barrels a day of crude oil and natural gas liquids and
around 1.66 billion cubic feet of natural gas a day
Estimated net proven liquid reserves of 6.85 billion
barrels; estimated net proven natural gas reserves of 10.5
trillion cubic feet
Exploration activities in 16 countries and production
activities in 11 countries
Largest oil producer in the US with over 8 per cent of
the oil produced in the country coming from BP fields
Largest oil producer in the UK North Sea.
Refining and Marketing
Total oil product sales of 3.3 million barrels a day
17,900 service stations world-wide
Refinery throughput of around 1.8 million barrels a day
Owned or part-owned refineries in 12 countries,
including the UK, France, Spain, the US, Australia, South
Africa and Singapore
One of the largest marketers of aviation fuels, serving
customers at more than 600 airports
Leading supplier of fuels and lubricants to the
shipping industry with facilities at more than 800 ports.
Chemicals
Produces around 9.4 million metric tons of product a
year
World's largest supplier of acetic acid and its
derivatives to the market
A leading European manufacturer of polyethylene which
is used in a range of modern products from food packaging to
gas pipes
More than 90 per cent of the world's manufacturing
capacity for acrylonitrile uses BP's proprietary process
BP has the world's largest acrylonitrile plant at Green
Lake, Texas
One of Europe's biggest styrenics producers and the top
supplier of oxygenated solvents
Europe's leading producer of polybutene, used in cable
insulation, fuel additives and adhesives.
Solar
World's second largest photovoltaic company
In 1997 sales reached $80 million, up 33 per cent on
1996
Manufactures the highest-efficiency solar cells in
volume production.
Amoco Corporation
1997 earnings of $2.7 billion
1997 revenues exceeding $36 billion
Capital employed in 1997 was $22 billion
Capital budget for 1998 of $3.9 billion
Some 43,000 employees world-wide at end-1997
In business since 1889
Over 340,000 shareholders.
Exploration & Production
1997 world-wide net production averaged 637,000 barrels
of crude oil and natural gas liquids per day and more than 4
billion cubic feet of natural gas per day
Proven liquid reserves of 2.4 billion barrels; proven
natural gas reserves of more than 21 trillion cubic feet
Exploration activities in some 20 countries, production
activities in 14 countries
Largest North American private natural gas producer;
second largest reserves holder.
Refining and Marketing
Total oil product sales of 1.2 million barrels a day
9,300 service stations, all in the US
Five US refineries process a total of about 1 million
barrels of crude oil daily.
Chemicals
Capacity of some 13 million metric tons of product a
year
World's largest producer of purified terephthalic acid
(PTA), used to make polyester fibers, cassette tapes,
photographic film and many types of plastic containers
World's largest producer of paraxylene, used in making
PTA
World's largest producer of polybutene
World's largest producer of poly alpha-olefins and
second-biggest producer of linear alpha-olefins
A leading world-wide producer of polypropylene, used in
synthetic fabrics and fibers
World's largest producer of woven polypropylene carpet-
backing
A leading supplier to the unsaturated polyester and
paint and coatings markets.
Solar
Amoco is 50 per cent owner of Solarex Corporation, the
largest producer of photovoltaic solar panels in the US.
NOTE: BP earnings are quoted UK GAAP and Amoco earnings US
GAAP.
Part lll
1. Principal Terms
Under the terms of the Merger:
Amoco shareholders will be entitled to receive for each
Amoco common share held at closing, 3.97 BP ordinary shares.
Such shares will be delivered in the form of BP Amoco
American Depository Receipts ("ADRs"), which represent six
BP ordinary shares.
Following the Merger, BP shareholders will hold
approximately 60 per cent and Amoco shareholders
approximately 40 per cent of the capital of the combined
company on a diluted basis.
BP will be renamed BP Amoco p.l.c.
BP Amoco's shares will remain listed on the London Stock
Exchange. BP Amoco will apply to list the new ADRs to be
issued to Amoco shareholders in connection with the Merger,
together with its existing ADRs, on the New York Stock
Exchange.
2. Structure of the Transaction
The Merger will be effected in accordance with the terms of
an Agreement and Plan of Merger dated as of August 11, 1998
(the "Merger Agreement"), entered into between BP, Eagle
Holdings, Inc., a wholly-owned US subsidiary of BP, and
Amoco.
Under the terms of the Merger, each share of common stock of
Amoco will effectively be canceled and re-issued to BP in
exchange for new BP ordinary shares to be delivered in the
form of ADRs.
On completion of the Merger BP will acquire the entire
issued share capital of Amoco. Following closing, Amoco
will be called BP-Amoco Corporation.
3. Merger Agreement
The Merger Agreement sets out the conditions to the closing
of the Merger. It also contains certain termination rights,
mutual representations and warranties and various convenants
relating to the operation of the businesses of BP and Amoco
in the period until closing.
The Merger Agreement requires BP and Amoco to effect the
Merger unless any one of the conditions to the
implementation of the Merger is not satisfied or waived by
August, 31 1999 or either BP or Amoco exercises one of its
limited termination rights. The Merger Agreement also
provides for termination fees to be paid by one party to the
other in certain circumstances.
a) Principal Conditions
The conditions to the implementation of the Merger include
BP and Amoco shareholder approvals, receipt of certain
regulatory and tax approvals and the absence of any
governmental order prohibiting the Merger.
b) Termination rights
The circumstances in which either party is able to terminate
the Merger Agreement include:
if either Amoco or BP shareholders do not approve the
Merger and related transactions;
if the other party enters into negotiations with any
other person in relation to an acquisition offer for that
party or that party's board recommends such a transaction;
if the board of the other party withdraws or adversely
modifies its recommendation of the Merger; or
if there is a material breach of covenant or warranty
by the other party.
c) Termination payments
The parties have agreed that Amoco will make a payment to BP
of up to US$950 million (making a total of US$1 billion
payable to BP when considered together with the US$50
million payable under the Stock Option Agreement) if the
Merger Agreement is terminated in the following
circumstances:
Amoco fails to obtain shareholder approval of the
Merger at a time when a third party has made an alternative
proposal;
the directors of Amoco withdraw or adversely amend
their approval of the Merger or recommend an alternative
transaction; or
Amoco recommends to its shareholders an alternative
proposal by a third party.
In the event of a termination based on the failure to obtain
shareholder approval, the termination payment will be
limited to US$500 million, with an additional US$450 million
payable to BP only in the event that Amoco enters into an
agreement for an alternative transaction.
Similarly, the parties have agreed that BP will make a
payment to Amoco of up to US$1 billion if the transaction is
terminated for identical reasons relating to BP and in the
same circumstances.
4. Stock Option Agreement
Amoco has granted BP an option to purchase 189,783,270
shares of Amoco Common Stock at a price per share of $41.00.
This represents approximately 19.9 per cent of the
outstanding Amoco Common Stock. The stock option is
exercisable in circumstances in which a termination fee also
is payable by Amoco to BP. The stock option includes terms
limiting the aggregate maximum amount receivable by BP under
the stock option agreement and termination fees, when
considered together, to US$1 billion.
5. Dividends
BP and Amoco will continue to pay quarterly dividends in the
ordinary course prior to the implementation of the Merger.
BP's gross scrip dividend share will continue to be
available in respect of dividends paid prior to March 31,
1999.
BP Amoco intends to continue paying four dividends a year.
Its dividend policy will be to pay out approximately 50 per
cent of through-cycle earnings. BP is considering
reconstituting its share capital in US dollars in line with
the accounts of the group, dividend declaration and the
currency of its material business operations.
6. Accounting and tax implications
It is intended that BP Amoco will have a calendar financial
year-end. The accounts of the group will be published in US
dollars and will be prepared in accordance with UK GAAP,
with a reconciliation to US GAAP.
_ END _