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B R E A K F A S T W I T H T H E F O O L Monday, October 16, 2000 benjamin.rogers@enron.com _________________________________________________________________ REGISTER TO BECOME A FOOL -- GET FREE STUFF! http://www.fool.com/m.asp?i=155934 _________________________________________________________________ Sponsored By: American Express Hey Fools! Trade online with a company you know and trust-American Express! Experience personalized planning tools, 24/7 customer service and low commissions. Apply now online! http://www.lnksrv.com/m.asp?i=155935 "If you don't read, you lose all perspective." -- David S. Jackson CHEVRON GUZZLES TEXACO Two U.S. oil powers agreed this weekend to form the world's fourth-largest oil and gas company. By Tom Jacobs The Texaco (NYSE: TX) board yesterday approved Chevron's (NYSE: CHV) $35.1 billion stock purchase offer. The deal between the No. 2 and No. 3 U.S. oil companies would create the fourth-largest world oil and gas concern, Chevron Texaco, and increase competition for world leader Exxon Mobil (NYSE: XOM). Chevron will pay 0.77 of a share for each Texaco share and assume $8 billion in debt, for a total of $45.4 billion. The per-share price -- slightly higher than the 0.765 that Chevron offered in 1999 talks that stalled -- values Texaco at $64.87, an 18% premium to its Friday close of $55.13. Chevron shareholders will have 61% control of Chevron Texaco and nine of the 15 board seats. Attention immediately focused on regulatory and political obstacles to the marriage. The new company would have major control of West Coast refining capacity and gas stations. Middle East upheavals could bring political scrutiny as well. But the new company's $85 billion market capitalization appears puny compared to BP Amoco's (NYSE: BP) $207 billion, and the smaller Chevron Texaco would arguably pose less of a threat to world gas prices. Texaco abruptly broke off prior merger talks in June 1999, allegedly due to bad chemistry between former Chevron CEO Kenneth Derr and Texaco Chairman Peter Bijur. Derr has since retired. The new CEO, David O'Reilly, assumed command nine months ago and reportedly has good relations with Bijur, including several golf dates. Reilly would be CEO of the new combined entity and Bijur would stay on as number two. The deal came just days after Texaco purchased General Motors' (NYSE: GM) interest in GM Ovonic, a joint venture between GM and Ovonic Battery Company, a subsidiary of Energy Conversion Devices (Nasdaq: ENER). Ovonic Battery was the originator of nickel metal hydride (NiMH) batteries for electric and hybrid vehicles. The joint venture develops production and manufacturing processes to commercialize the NiMH battery technology for use in 2003 model year cars. Texaco's share of the joint venture is 50%, adding to its 20% ownership of Energy Conversion Devices. There is no information whether the Chevron purchase will affect this deal. All told, the deal looks good for Texaco. Though both companies' revenues are approximately $36 billion, Texaco's profits are 60% of Chevron's. On Friday's huge up day, Texaco closed at $55.13, off $1.88, while Chevron shed $3.06 to finish at $84.25. _________________________________________________________________ NEWS TO GO European regulators switched course Friday and approved Vivendi's (NYSE: V) $34 billion acquisition of Canada's Seagram (NYSE: VO), after the European Commission indicated it might subject the deal to a time-consuming further investigation. The key shift occurred when Vivendi agreed not to discriminate against competitors seeking access to Seagram's Universal unit's film and music libraries. Observers are surprised that this deal practically flew by in comparison with the five-month probe of the Time Warner (NYSE: TWX)-America Online (NYSE: AOL) deal. Qualcomm's (Nasdaq: QCOM) on-again, off-again affair with China Unicom over increased Chinese penetration of Qualcomm's CDMA (code division multiple access) wireless technology is back on. The companies announced that they will join Shenzhen Zhongxing Telecom, the leading Chinese CDMA phone equipment manufacturer, to produce a CDMA handset for sale in China. A cool feature is that it allows users to remove subscriber identification module cards and switch phones, and retain their number and service. Would be a good idea for the U.S., wouldn't it? Dream on. Continental Airlines (NYSE: CAL) announced today third-quarter earnings of $2.24 a share, a 54% jump over last year. This exceeded First Call consensus estimates of $2.19 a share (click here for a Foolish take on earnings estimates). The company trumpeted its 22nd consecutive profitable quarter. Passenger revenue increased in every geographic market, ranging from 12.2% domestically and 27.9% for transatlantic traffic. http://www.fool.com/m.asp?i=155936 Continental may be smiling, but Delta Airlines (NYSE: DAL) isn't. Its pilots' contract proposal seeks huge pay increases and parity with pilots for United Airlines (NYSE: UAL). The pilots agreed in 1996 to a 2% pay cut and other work concessions to assist Delta's turnaround. They now want 30-49% raises over three years, which would bring basic pay for a 777 captain with 12 years experience to $267,600. (Would we feel safer?) Gregg Holm, a spokesman for the Air Line Pilots Association, called this "United [Airlines] plus." Check out Friday's Foolish market wrap-up with one swift click! http://www.fool.com/m.asp?i=155937 _________________________________________________________________ EDITOR'S PICK After Wall Street's crazy week, David Gardner reminds us why stock investments should be made for the long term. http://www.fool.com/m.asp?i=155938 _______________________________________________________________ -News & Commentary http://www.fool.com/m.asp?i=155939 -Fool Community http://www.fool.com/m.asp?i=155940 -Post of the Day http://www.fool.com/m.asp?i=155941 -Latest Fribble http://www.fool.com/m.asp?i=155942 -Latest Market Numbers http://www.fool.com/m.asp?i=155943 ____________________________________________________________ My Portfolio: http://www.fool.com/m.asp?i=155944 My Discussion Boards: http://www.fool.com/m.asp?i=155945 My Fool: http://www.fool.com/m.asp?i=155946 Fool.com Home: http://www.fool.com/m.asp?i=155947 My E-Mail Settings: http://www.fool.com/m.asp?i=155948 Sponsored By: American Express Hey Fools! Trade online with a company you know and trust-American Express! Experience personalized planning tools, 24/7 customer service and low commissions. Apply now online! http://www.lnksrv.com/m.asp?i=155949 WIRELESS 201: FREE PREVIEW Get a sneak peek at this report on Soapbox.com http://www.lnksrv.com/m.asp?i=155950 BECOME A FOOL! Get a FREE Investing Guide and more... http://www.fool.com/m.asp?i=155951 FOOL DIRECT E-MAIL SERVICES Need to change your address or unsubscribe? You can also temporarily suspend mail delivery. Click here: http://www.fool.com/community/freemail/freemaillogin.asp?email=benjamin.rogers @enron.com< Have ideas about how we can improve the Fool Direct or new e-mail products you'd like to see? Try our discussion board: http://www.fool.com/m.asp?i=155952 ____________________________________________________ © Copyright 2000, The Motley Fool. All rights reserved. This material is for personal use only. Republication and redissemination, including posting to news groups, is expressly prohibited without the prior written consent of The Motley Fool. . MsgId: msg-6995-B10165557Address.msg-09:08:35(10-16-2000) X-Version: mailer-sender-master,v 1.84 X-Version: mailer-sender-daemon,v 1.84 Message-Recipient: benjamin.rogers@enron.com
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