More job cuts forecast as BP Amoco surges

Click to follow
The Independent Online
BP AMOCO shares surged yesterday as Britain's biggest company began trading with a warning that job losses would exceed the 6,000 initially forecast.

In heavy trading, shares in the new oil giant rose by 3 per cent to 928p on the first day of dealings, valuing the company at around pounds 90bn.

This makes BP Amoco the biggest company by market capitalisation in the FTSE100 index of leading shares and the world's third biggest oil major behind Exxon-Mobil and Royal Dutch Shell.

BP Amoco was by far the most actively traded stock in London with more than 70 million shares changing hands as fund managers raised their weightings.

A spokesman said that job losses would be higher than the 6,000 forecast when the merger was unveiled last August.

But he stressed that the bulk of the additional redundancies would be in the US. Of the 6,000 job losses so far announced, about 1,000 will be in the UK.

BP Amoco has pledged to reduce its cost base by 30 per cent, which will help yield savings of $2bn a year by the end of 2000.

But analysts believe the eventual figure will be much bigger than that, perhaps as high as $3.5bn.

The merger cleared its final hurdle last week after the US Federal Trade Commission gave the deal the go-ahead with only minor conditions.

BP Amoco is having to dispose of 134 petrol stations in the US - less than 1 per cent of the 16,000 it owns - and nine oil product storage terminals in return for regulatory approval.

BP Amoco's chief executive will be Sir John Browne, the former chief executive of BP, while Larry Fuller of Amoco will be co-chairman alongside BP's Peter Sutherland until his retirement in 2000.

The enlarged group will start life with combined revenues of $108bn, some 100,000 employees, reserves of 14.8 billion barrels of oil and gas and daily production of about 3 million barrels.

Comments