Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser

Posted on: Tuesday, March 26, 2002

Shell to buy Pennzoil-Quaker

By Michael Graczyk
Associated Press

HOUSTON — Shell Oil said yesterday it had signed an agreement to acquire Pennzoil-Quaker State Co., the nation's biggest producer of motor oil and parent company of more than 2,000 Jiffy Lube oil-change service stations, for $1.8 billion in cash.

While the Pennzoil and Quaker State brand names should survive the deal, a Shell spokeswoman said the acquisition would mean job losses of about 15 percent, or about 1,230 people, as the firms combine operations.

Shell's Lubricants Group employs about 800 people. In Houston, where Shell has its headquarters, the company has 7,039 workers.

Pennzoil-Quaker State, also based in Houston, has about 7,400 people worldwide.

"Sounds like one more step in the consolidation business," said Bill Gilmer, a Houston economist with the Federal Reserve Bank of Dallas.

Just two weeks ago, shareholders of Conoco Inc. and Phillips Petroleum Co. overwhelmingly approved a proposed $15.6 billion merger, moving the companies one step closer to creating the nation's third-largest oil corporation. The new company will be based in Houston.

The deal calls for Shell, a unit of Royal Dutch Petroleum Co., to pay $22 for each share of Pennzoil-Quaker State and assume $1.1 billion of the Houston-based company's debt, Shell said.

The deal has been approved by Houston-based Pennzoil-Quaker's board and expected to be completed during the second half of 2002 but is subject to regulatory and shareholder approval, both companies said.

Pennzoil-Quaker State is the United States' biggest producer of motor oil, including the Pennzoil and Quaker State brands. Its Jiffy Lube chain has more than 2,150 locations across the United States.