EXHIBIT 20
FOR IMMEDIATE RELEASE
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Contacts Ultramar Diamond Shamrock
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:
Media and Investors: Media: Katherine Hughes
Steven Blank (203) 622- (210) 641-8846
7019 Investors: Mary Hartman
For 9/23 & 9/24: (212) (210) 641-8840
953-2550 For 9/23 & 9/24: (212) 953-
2550
ULTRAMAR AND DIAMOND SHAMROCK TO MERGE
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Merger of Equals Will Create One of the Largest North American Petroleum
Refiner/Marketers;
Transaction Expected to be Accretive to Earnings
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GREENWICH, Conn. and SAN ANTONIO, Tex. (September 23, 1996) -- Ultramar
Corporation (NYSE:ULR) and Diamond Shamrock, Inc. (NYSE:DRM), petroleum refining
and marketing companies with strong presences in different regions of North
America, announced today that they have agreed to merge. In the merger of
equals, each share of Diamond Shamrock will be converted into 1.02 shares of
Ultramar common stock. The new company will have combined revenues of more than
$8 billion and a combined equity market value of over $2.3 billion. The
transaction will be accounted for on a pooling of interests basis and is
expected to be accretive to earnings. The combined company will be named
Ultramar Diamond Shamrock Corp. and will be headquartered in San Antonio, Texas.
Roger Hemminghaus, chairman, chief executive officer and president of
Diamond Shamrock, will become chairman and chief executive officer of Ultramar
Diamond Shamrock. Jean Gaulin, chairman, chief executive officer and president
of Ultramar, will become the new company's vice chairman, president and chief
operating officer. Mr. Gaulin
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will become Ultramar Diamond Shamrock's CEO by the end of 1998 and will become
chairman within three years thereafter. The Board of Directors will be
comprised of twelve individuals, with six each coming from the boards of
Ultramar and Diamond Shamrock.
Ultramar Diamond Shamrock expects to pay an annual dividend of $1.10 per
share of common stock, which is Ultramar's current dividend rate.
"This is truly a merger of equals between two strong companies that fit
together remarkably well," said Mr. Hemminghaus. "By joining together, we will
leverage both our companies' considerable strength in petroleum refining and
marketing and create new opportunities for cost savings and strategic expansion.
The merger will position the new company for greater penetration of attractive
western U.S. markets, including Arizona, California and Nevada."
"This is a combination of two companies which have high quality assets and
management. We will be building a new company with the best management and
business opportunities from both sides. Our corporate cultures are
complementary and we are all looking forward to working together,"
Mr. Hemminghaus said.
"Ultramar and Diamond Shamrock are ideal partners," said Mr. Gaulin.
"Diamond Shamrock's large retail network and significant presence in the
U.S. Southwest strongly complement Ultramar's refining and marketing operations
in California and Canada. With such strong regional anchors, our new company
has tremendous potential to expand into new markets and improve performance in
existing ones."
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"This merger creates exciting opportunities for the shareholders of both
companies," Mr. Gaulin said. "The transaction is expected to be accretive to
earnings. Ultramar Diamond Shamrock will benefit from enhanced earnings growth
prospects, less earnings volatility, increased geographic diversity of revenues,
and significant merger savings."
Cost savings related to the merger are projected to be at least $75 million
annually, based primarily on the realization of operating synergies and
reduction of overhead and administrative costs, with $25 million estimated to be
realized in 1997 and the full $75 million to be realized each year thereafter.
One-time transaction costs are estimated at $17 million, which will be booked in
1996. In addition there are approximately $50 million in transition costs, most
of which will be booked in 1996. It is anticipated that approximately
200 positions will be eliminated as a result of the merger, out of a combined
workforce of about 17,000 employees.
The Boards of Directors of both Ultramar and Diamond Shamrock have approved
the merger. The transaction is subject to approval by the shareholders of both
companies, and to customary regulatory approvals. The parties expect the
transaction to close at the end of this year.
Wasserstein Perella & Co., Inc. acted as financial adviser to Diamond
Shamrock and provided a fairness opinion. Merrill Lynch & Co. acted as
principal financial adviser to Ultramar and provided a fairness opinion.
Ultramar Corporation, headquartered in Greenwich, Connecticut, is a
petroleum refining and marketing company which operates in California, Eastern
Canada and the northeast United States. Ultramar employs approximately
4,000 people. Ultramar operates
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two refineries, in Wilmington, California, and in Quebec Province, with a
combined capacity of 250,000 barrels per day. In California, it markets
gasoline through 360 locations (150 owned and operated by the company) under the
Ultramar and Beacon brands. Ultramar's Eastern Canadian retail network includes
1,400 locations (of which approximately 630 are company-owned or controlled
under long-term lease). In Eastern Canada, Ultramar markets gasoline under the
Ultramar and Sergaz brands. Within this network, Ultramar owns and operates
110 convenience stores and plans to grow this number significantly over the next
several years. Ultramar is one of the largest home heating oil companies in
North America and sells heating oil to over 175,000 households in Eastern Canada
and New England.
Diamond Shamrock, Inc., headquartered in San Antonio, is a leading refiner
and marketer of petroleum products in the Southwest, with a growing mix of
related businesses. Diamond Shamrock has two Texas refineries with a combined
capacity of 225,000 barrels per day, and markets gasoline and convenience store
items through approximately 2,700 Corner Store, Stop N Go and Diamond Shamrock
locations (1,500 owned and operated by the company) in nine states. Diamond
Shamrock markets the largest-selling gasoline brand in Texas and the second
largest in Colorado and New Mexico. Its revenue from convenience store
merchandise approaches $1 billion annually. Diamond Shamrock also produces
petrochemical feedstocks and operates the world's largest commercial natural gas
liquids storage facility, serving the refining and petrochemicals industries in
the Texas Gulf Coast area. Diamond Shamrock has more than 13,000 employees.
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