Conoco Inc. and Phillips Petroleum Co. will merge to become ConocoPhillips, the third-largest integrated U.S. energy company and the fifth-largest global refiner.

Under the terms of the agreement, Phillips shareholders will receive one share of new ConocoPhillips common stock for each share of Phillips they own. Conoco shareholders will receive 0.4677 shares of new ConocoPhillips common stock for each share of Conoco they own. The combined market value of the new company would be $35 billion. At inception, Phillips shareholders will own about 56.6 percent and Conoco shareholders will own about 43.4 percent of the new company.
The transaction is expected to save about $750 million a year within the first full year after closing on the deal. These savings will result from more efficient exploration, production and downstream activities, and the elimination of duplicate corporate and administrative positions, programs and operating offices.
Archie W. Dunham, Conoco chairman and CEO, will serve as chairman of ConocoPhillips and will delay his scheduled retirement to 2004. James J. Mulva, Phillips chairman and CEO will be president and CEO of the combined company, and also become chairman upon Dunham's retirement.