Exhibit 99.1
FOR IMMEDIATE RELEASE
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Contacts: Ultramar Diamond Shamrock
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Media and Investors: Media: Katherine Hughes
Steven Blank (203) 622-7019 (210) 641-8846
For 9/23 & 9/24: (212) 953-2550 Investors: Mary Hartman
(210) 641-8840
For 9/23 & 9/24: (212) 953-2550
ULTRAMAR AND DIAMOND SHAMROCK TO MERGE
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 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.
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"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."
"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 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.
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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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