BP → Amoco
BP's all-share merger with Amoco, agreed on 11 August 1998 and billed as a merger of equals, was the largest industrial merger in the world at the time; it created BP Amoco, with BP's shareholders holding 60% and the head office in London, and by the end of that year Exxon had agreed to buy Mobil.
Opened the wave of oil supermajor consolidation that Exxon/Mobil and Total/Petrofina followed.
- Value
- $48B
- Announced
- August 1998
- Completed
- December 1998
- Sector
- Energy
- Deal type
- merger
- Acquirer
- BP (United Kingdom)
- Target
- Amoco (United States)
Why it mattered
Oil prices had fallen to their lowest in more than a decade, and Amoco, the old Standard Oil of Indiana, reported a 50% fall in second-quarter earnings. BP's chief executive, John Browne, suggested the combination to Amoco's chairman, Laurance Fuller, in May 1998. For most of the summer they negotiated a dual holding company — two listed companies run as one by identical boards — but on 7 August, after discussions with the SEC about its accounting, they dropped it and within three days agreed a plain share exchange: 3.97 new BP Amoco shares, or about 0.66 of an American depositary share, for each Amoco share. On the eve of the announcement the two companies were worth about $110bn together, and they promised $2bn a year of pre-tax savings by 2001.
The equality was in the titles. BP's Peter Sutherland and Fuller became co-chairmen, but Browne ran the company from London and 6,000 jobs were to go. Competition review was light because the two rarely overlapped: the Federal Trade Commission voted 4–0 on 30 December to clear the deal once the companies agreed to sell 134 petrol stations and nine terminals, and the merger took effect on 31 December 1998.
What it left behind
BP Amoco kept buying. It agreed to take over ARCO for $26.8bn in April 1999 — cleared only after it agreed to sell ARCO's Alaska holdings — and bought Burmah Castrol in 2000, then renamed itself BP in 2001 under the "Beyond Petroleum" slogan. Most Amoco stations became BP stations; the Amoco brand was revived in 2017 and had about 900 US stations by May 2025. The refinery at Texas City, which came with Amoco, exploded on 23 March 2005, killing 15 workers — major upgrades to the 1934 plant had been postponed to save money — and BP pleaded guilty to a felony Clean Air Act charge before selling the plant to Marathon Petroleum in 2012. The merger shows that the savings case is written for the first three years, while the operating condition of the assets acquired decides what the deal costs over the next twenty.