BP Amoco bid powers Dow to 10,007 close

BP AMOCO'S takeover of Atlantic Richfield (Arco) is set to value the US oil company at more than $26bn (pounds 16bn) after a new bout of merger fever caused sharp rises in share prices on both sides of the Atlantic yesterday. In New York, the Dow closed above 10,000 for the first time, up by 184.54 points on the day at 10,006.78

The all-share deal is to be unveiled tomorrow or on Thursday following board meetings. It will turn BP Amoco into the world's second-biggest oil major behind Exxon-Mobil.

BP Amoco shares surged by 4 per cent on confirmation of the merger talks, helping the FTSE 100 index of leading shares to close 113.7 points higher at 6,252.9. BP Amoco is the biggest constituent in the index, which was also boosted by takeover speculation in the pharmaceuticals and publishing sectors.

Shares in Arco rose by 10 per cent to $72.75, helping the Dow's advance. The BP Amoco offer had been expected to value Arco at about $77, but the rise in its own share price may raise this to above $80.

The merger is expected to produce cost savings of around $1bn, principally through rationalising joint operations in Alaska where BP Amoco and Arco operate the Prudhoe Bay field. Arco has already pledged to trim costs by $500m under a plan that will cost 1,200 jobs.

But there may be a goodwill write-off of up to $6bn as the deal will be classed a takeover under global accounting rules. Last year's pounds 80bn link-up of BP and Amoco was classed a merger.

Analysts united yesterday in welcoming the BP Amoco-Arco deal, describing the two companies as a good fit and praising the BP Amoco chief executive, Sir John Browne, for stealing a march on Royal Dutch Shell.

The deal is unlikely to run into major regulatory hurdles as Arco's petrol retailing is concentrated on the US West Coast, where it has 1,700 stations and 26 per cent of the California market. BP Amoco's operations are mainly on the East Coast and in the Mid West.

Outlook, page 15

people And here is why...
peopleStella McCartney apologises over controversial Instagram picture
Arts and Entertainment
Hayley Williams performs with Paramore in New York
musicParamore singer says 'Steal Your Girl' is itself stolen from a New Found Glory hit
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Trust Accountant - Kent

NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

Law Costs

Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

Day In a Page

Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

The children orphaned by Ebola...

... then rejected by surviving relatives over fear of infection
Pride: Are censors pandering to homophobia?

Are censors pandering to homophobia?

US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
The magic of roundabouts

Lords of the rings

Just who are the Roundabout Appreciation Society?
Why do we like making lists?

Notes to self: Why do we like making lists?

Well it was good enough for Ancient Egyptians and Picasso...
Hong Kong protests: A good time to open a new restaurant?

A good time to open a new restaurant in Hong Kong?

As pro-democracy demonstrators hold firm, chef Rowley Leigh, who's in the city to open a new restaurant, says you couldn't hope to meet a nicer bunch
Paris Fashion Week: Karl Lagerfeld leads a feminist riot on 'Boulevard Chanel'

Paris Fashion Week

Lagerfeld leads a feminist riot on 'Boulevard Chanel'
Bruce Chatwin's Wales: One of the finest one-day walks in Britain

Simon Calder discovers Bruce Chatwin's Wales

One of the finest one-day walks you could hope for - in Britain
10 best children's nightwear

10 best children's nightwear

Make sure the kids stay cosy on cooler autumn nights in this selection of pjs, onesies and nighties
Manchester City vs Roma: Five things we learnt from City’s draw at the Etihad

Manchester City vs Roma

Five things we learnt from City’s Champions League draw at the Etihad
Martin Hardy: Mike Ashley must act now and end the Alan Pardew reign

Trouble on the Tyne

Ashley must act now and end Pardew's reign at Newcastle, says Martin Hardy
Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

Isis an hour away from Baghdad -

and with no sign of Iraq army being able to make a successful counter-attack
Turner Prize 2014 is frustratingly timid

Turner Prize 2014 is frustratingly timid

The exhibition nods to rich and potentially brilliant ideas, but steps back
Last chance to see: Half the world’s animals have disappeared over the last 40 years

Last chance to see...

The Earth’s animal wildlife population has halved in 40 years
So here's why teenagers are always grumpy - and it's not what you think

Truth behind teens' grumpiness

Early school hours mess with their biological clocks
Why can no one stop hackers putting celebrities' private photos online?

Hacked photos: the third wave

Why can no one stop hackers putting celebrities' private photos online?