EXHIBIT 99.1
FOR IMMEDIATE RELEASE
TUESDAY, DECEMBER 1, 1998
EXXON AND MOBIL SIGN MERGER AGREEMENT
NEW YORK, December 1 -- Exxon and Mobil announced today that they have
signed a definitive agreement to merge the two companies.
Under the terms of the agreement, each share of Mobil will be
converted into 1.32015 shares of Exxon. As a result of the merger, Mobil
shareholders will own about 30 percent of the company, while Exxon
shareholders will own about 70 percent.
Upon completion of the merger, the company's name will be Exxon Mobil
Corporation, with headquarters in Irving, Texas.
L.R. Raymond will be the Chairman, Chief Executive Officer and
President of Exxon Mobil Corporation. L.A. Noto will join the Exxon Mobil
Board of Directors as Vice Chairman.
E.A. Renna will join the Board as a Senior Vice President and
Director. Four additional members of Mobil's Board will be invited to join
the Exxon Mobil Board as non-employee Directors, bringing Board membership
for the company to a total of 19 Directors.
The company will be organized on a functional basis. The Upstream
will report to H.J. Longwell, the Downstream to Mr. Renna and the Chemical
business to R. Dahan. Worldwide downstream headquarters for the company
will be located in Fairfax, Virginia. Worldwide upstream and chemical
headquarters will be in Houston, Texas. Exxon Mobil will continue to use
both the Exxon brand and the Mobil brand.
"This merger brings together two outstanding organizations that share
common values, have compatible strategies and demonstrated track records of
achievement," said Mr. Raymond and Mr. Noto in a joint statement. "The
merger will significantly enhance shareholder value by enabling us to
manage the combined assets of Exxon and Mobil to produce a higher return on
capital employed than either company could achieve on a stand-alone basis.
"The merging of these two companies will deliver significant near-term
pre-tax synergies of about $2.8 billion," they said. "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. It
allows us to manage our expanded, combined asset base to deliver increasing
returns and growth to our shareholders while reducing our operating costs.
It also allows us to continue delivering quality products to our customers
at competitive prices into the future. We are confident that with the
exceptional quality of Exxon's and Mobil's employees, we will succeed in
meeting these objectives."
They noted that combining Exxon and Mobil will create a major global
company, headquartered in the U.S., with the technology, the resources and
the people to compete effectively with other companies of a similar or
larger scale in the world oil industry of the 21st Century. "The relative
strengths of our two companies are highly complementary," they said. "When
combined, Exxon Mobil will provide better opportunities for both our
shareholders and employees than those they would experience without this
merger. By combining our operations, we also will be better able to meet
the needs of our customers for quality products in the next century. It's
a good match."
"While we expect to benefit from a reduction of costs in the short-
term, our real objective is to maximize growth and return on investment by
successfully managing the existing assets of Exxon and Mobil and by
selecting the best projects from the large portfolio of investment options
that will be created by this merger," they said. "Combining the
proprietary technologies and management expertise of the two companies also
will reinforce the selection of Exxon Mobil as the partner of choice,
creating additional resource opportunities in the future."
In discussing the strategic fit of Exxon and Mobil, Mr. Raymond said
the two companies line up well with each other in almost every facet of the
business. "In the exploration and production area, for example, Mobil's
and Exxon's respective strengths in West Africa, the Caspian region,
Russia, South America, and North America line up well, with minimal
overlap. Our respective deepwater assets and deepwater technology also
complement each other well."
Exxon Mobil will have combined natural gas sales of about 14 billion
cubic feet per day, giving the company a solid position in this
increasingly important worldwide fuel resource. Mobil also brings major
LNG assets and experience to the combined company that complement Exxon's
assets and technology with little overlap.
Mr. Noto said that in refining and marketing, Exxon and Mobil each
have significant global brand recognition, expertise and technology. "In
the lubricant area, for example, Exxon is an important producer of lube
base stocks, which fits well with Mobil's leadership in lubes marketing."
In the U.S., Exxon Mobil will approach the size and scale nationally
and regionally of the new downstream joint venture companies announced by
other major competitors. Outside the U.S., Exxon Mobil will be
competitively well positioned in key Asian markets and will have
complementary positions in South America. The merger also builds on
Mobil's significant position in Africa.
"Chemicals are another area where there is a good strategic fit," said
Mr. Raymond. "Exxon's chemical product line aligns well with Mobil's
chemical products. The two companies also share a common focus on
efficiency and site integration. Exxon Mobil should realize immediate
benefits through sharing the proprietary technology and best practices of
each company.
Exxon and Mobil also bring important, state-of-the-art proprietary
technologies to the venture that will greatly benefit the merged company.
In exploration and production, this includes leading-edge geoscience
technology to find and develop oil and gas reserves, arctic technology, and
heavy oil technology. In refining, marketing and chemicals, this includes
catalyst, synthetic lubricant and chemical manufacturing technology.
The merger is subject to shareholder and regulatory approval, as well
as other customary conditions. It is intended that the merger will qualify
as a tax-free reorganization in the United States and that it will be
accounted for on a "pooling of interests" basis. In addition, the merger
agreement provides for payment of termination fees of $1.5 billion under
certain circumstances. The parties also have entered in an option
agreement that grants Exxon the option under specified circumstances to
purchase up to 14.9 percent of the authorized but unissued common stock of
Mobil.
Exxon and Mobil expect to provide details of the proposed merger to
their shareholders prior to their annual meetings in April and May,
respectively.
Exxon's program of repurchasing its share to reduce the number of
shares outstanding will be discontinued; however, Exxon will continue to
repurchase its shares to offset dilution from employee incentive programs.
Exxon was advised on the merger by J.P. Morgan. Mobil was advised by
Goldman Sachs.
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