(story to be published in tomorrow's issue, March 21)
BP Amoco plans a rolling programme of share buy-backs in the US and UK following its $29bn acquisition of Atlantic Richfield, Sir John Browne, chief executive, said at the end of last week. Subject to approval at the oil group's annual meeting next month, the programme should begin in early May. Analysts believe BP Amoco could buy back to 1 to 2 per cent of its current market capitalisation of around $200bn, or $4bn worth of shares, this year. The aim over the next five years would be to buy back about 10 per cent of the shares or about $20bn worth, although this will be partly dependent on the level of crude oil prices and the company's growth opportunities. The buy-back plan was unveiled at the same time as the company announced it planned a $1.25bn tender offer for the outstanding shares of Arco's Vastar Resources subsidiary once the Arco acquisition was completed. Los Angeles-based Arco already owns about 82 per cent of Vastar, a large, Houston-based independent oil and gas company that has a large presence in the Gulf of Mexico. BP said the acquisition of the remaining shares, for which it will offer $71 a share, would help it realise the $1bn in savings it initially projected from the acquisition of Arco. Those announcements were among several BP Amoco made on Thursday following the deal it unveiled Wednesday to sell Arco's Alaska assets to Phillips Petroleum for $7bn in an effort to win US regulatory approval for the Arco deal. Sir John said the company hoped to complete the deal "within a few weeks" following the decision of the Federal Trade Commission on Wednesday to suspend legal action to block the merger. "This is the culmination of an effort to bring complex legal political, and commercial issues (together)," Sir John said. The company has asked the FTC for a consent order allowing it to close the merger. It is hoping for completion, by April 1, the anniversary of the deal's announcement. Sir John said that despite the loss of some $200m in savings related to Alaska as a result of the Phillips deal, the company still believed it could deliver $1bn in pre-tax savings. The proceeds from the sale of Arco assets are expected to total about $7.5bn, including the deal with Phillips and another deal to sell Arco's pipeline and storage facilities to Houston-based Teppco Partners for $355m. The company will realise another $3.5 to $4bn from disposals related to its ongoing restructuring. Vastar shares surged $81/8 to $711/4 in midday trading on Thursday in New York. BP Amoco was up $13/16 at $539/16, and Arco shares were up $25/8 at $857/8. Reuters
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