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Ultramar Diamond buys Phillips

October 8, 1998

BARTLESVILLE, Okla. (AP) _ Ultramar Diamond Shamrock Corp. is buying Phillips Petroleum Co.’s North American oil refining and marketing businesses to create a leading energy company with more than 12,000 gas stations.

Ultramar will pay $800 million in the deal, announced today. It will own 55 percent of the combined operations, which will be called Diamond 66 to capitalize on the familiar Phillips 66 brand name.

The merger will result in about 1,000 job cuts, equal to 3 percent of Diamond 66′s combined work force of 29,000.

Diamond 66 will have $20 billion in annual revenue, with headquarters in San Antonio and credit card, pipeline, lubricants and other functions based in Bartlesville.

Diamond 66 will have more than 12,000 gas stations in 36 states and six Canadian provinces. It will operate 10 refineries in North America, with production capacity of 1 million barrels a day, and about 13,200 miles of pipelines.

Ultramar currently operates gas stations under the names Diamond Shamrock, Ultramar, Beacon or Total.

The deal follows similar mergers of refining operations by energy companies seeking to control costs, as well as a major shakeup of the global energy business with the planned merger of giants British Petroleum and Amoco Corp.

The companies expect the deal to generate $250 million in cost savings by 2001. The merger is expected to close in the first quarter of next year.

Ultramar’s current vice chairman, president and chief operating officer, Jean Gaulin, will become chairman and CEO of Diamond 66. Gaulin was chairman of Ultramar Corp. before its 1996 merger with Diamond Shamrock.

In addition to the North American businesses it is contributing to Diamond 66, Phillips has operations in the United Kingdom, China, Nigeria and Norway.

Phillips stock was down 50 cents at $46.12 1/2 in morning trading on the New York Stock Exchange, while Ultramar shares climbed 31 1/4 cents to $23.

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