HOUSTON (Oct. 1, 2002) — The U.S. Federal Trade Commission (FTC) has cleared the way for Shell Oil Co. to acquire Pennzoil-Quaker State Co., marking the latest in oil industry consolidations that have occurred in the last several years.
According to a statement from Pennzoil-Quaker State, the company and Shell—both based in Houston—entered into a consent order with the FTC that resolves federal regulators' concerns regarding the U.S. Group II base oil marketplace. An Associated Press report said the FTC conditioned its approval on Pennzoil selling its interest in a company that makes the feed stock used in high-performance motor oil, noting the motor oil's cost likely would increase because of lack of competition.
Pennzoil-Quaker State expected the $1.8 billion acquisition, announced by Shell last March, would be completed today. Following the closing, the company said its shareholders will receive $22 in cash per share—which was the price the stock was trading at as of late this morning.
The board of Pennzoil-Quaker State approved the deal in August. Both brands will survive the merger, which gives Shell—a wholly-owned member of the Royal Dutch/Shell Group of Companies—three of the top five domestic motor oil brands. Shell also produces Havoline brand motor oil.
As part of the acquisition, Shell agreed to assume $1.1 billion of Pennzoil-Quaker State's debt, the AP report said.
Pennzoil-Quaker State owns or franchises more than 2,150 Jiffy Lube service centers nationwide. The company had worldwide revenues of about $2.3 billion last fiscal year while Royal Dutch/Shell Group reported worldwide revenues of approximately $135 billion last fiscal year.