Texaco will likely be forced to spin off its stake in joint venture companies Motiva and Equilon in order to win antitrust approval of its merger with Chevron.

Equilon and Motiva are joint ventures between Texaco, Shell, and Saudi Refining Co. Equilon Commercial Fuels markets diesel and unbranded gasoline in the western and mid-western parts of the United States to wholesalers, truckstops and consumer end users. Motiva Commercial offers a full range of diesel fuel and heating oil products at a network of terminals throughout the East Coast and Gulf Coast. Motiva Commercial also offers mobile fleet fueling through Shell Fueling Services LLC on the East Coast.
The Oil Price Information Service reports that in a filing with the Securities and Exchange Commission, Chevron and Texaco say they expect to resolve Federal Trade Commission market concentration concerns "by the disposition of Texaco's interests in Equilon and Motiva." (See "Chevron-Texaco Merger Could Affect Equilon, Motiva Ventures," 10/17/2000.)
The papers also indicate that the merger may be terminated by either party if not completed by Oct. 15, unless the hold-up is due to regulatory review. If that's the case, the deadline can be extended to April 15, 2002.
Chevron says the new company, ChevronTexaco, would see combined costs cut by at least $1.2 billion per year within six to nine months of the merger.
The two companies are currently gathering documents to comply with the FTC's second request for information, issued last month.