DALLAS -- Exxon Corp.'s plan to create the largest publicly traded oil company with an $88 billion buyout of Mobil Corp. was overwhelmingly approved yesterday by both companies' shareholders.
Exxon said 99.2 percent of shares voted by its shareholders were cast in favor of the merger. Mobil said 98.3 percent of its shares voted were cast for the buyout. The companies held separate shareholder meetings yesterday at hotels in Dallas, near Exxon's headquarters in Irving, Texas.
The two companies announced the buyout Dec. 1 as oil prices were at historic lows and industry profits were plunging. Still, Lee R. Raymond, Exxon's chairman and chief executive officer, said yesterday that speculation that low oil prices forced the two biggest U.S. oil firms to merge is incorrect.
"This merger is independent of the price of oil," Raymond said.
Cost savings and the need to compete better against huge, state-owned oil companies for international oil projects led to the buyout agreement, Raymond said in response to a shareholder's question.
Exxon estimates that merger-related cost savings will add $2.8 billion a year to its earnings. The companies plan to cut 9,000 jobs from their combined work force of about 120,000.
Raymond told shareholders that Exxon and Mobil "have been very mindful of the impact we have on families" and that severance packages will be "consistent with [Exxon's] past practices."
The company needs to get bigger to compete, said Raymond and Lou Noto, Mobil's chief executive officer. The new company, which will be named Exxon Mobil, will have a market value of about $270 billion.
U.S. and European antitrust authorities have yet to approve the transaction. The companies, which originally said the acquisition would close in mid-1999, are now targeting September.
Mobil shareholders would get $104 a share in Exxon stock if the transaction closed yesterday, about 40 percent more than their shares were trading before the buyout was publicly announced. The stock portion of the acquisition is valued at $84 billion. Exxon also would assume almost $4 billion in debt.
Exxon shares yesterday fell $3.13 to $78.81. Mobil fell $3.38 to $99.69.
Pub Date: 5/28/99