IT'S A BIG DEAL; OIL COMPANY MERGER EARNS PAGE IN RECORD BOOKS.

Byline: Sallie L. Gaines Chicago Tribune 

From almost any angle, the Exxon Corp.-Mobil Corp. merger is a big deal.

Exxon, the biggest oil company in the nation, announced Tuesday it will acquire Mobil to become the biggest in the world. The all-stock deal, valued at about $77 billion based on Exxon's closing share price Tuesday, will be the biggest merger in U.S. history and create the biggest company on the Fortune 500.

The deal also reunites two of the biggest chunks of John D. Rockefeller's Standard Oil Trust, busted up by the federal government in 1911.

But bigness isn't the point, insisted Exxon's chairman and chief executive, Lee Raymond, who'll retain those jobs in the new Exxon Mobil Corp.

``I have no interest in being the largest company in the Fortune 500,'' Raymond said at a news conference. ``Revenues mean nothing to me. What counts is profit.''

He added: ``The objective is to be best. If in being best you also happen to be biggest, that's fine.''

While the merger is one for the record books, it won't be a big deal to drivers. The combined company will continue to use both brands, which will lead to some divestitures in states where Mobil and Exxon together raise antitrust concerns, Raymond said.

Nationally, Exxon Mobil will have ``on the order of 13 percent'' of the market, said Lucio Noto, Mobil's chief executive who will be vice chairman of the combined company.

That means the marketing alliance of Shell Oil Co. and Texaco Inc. will remain the nation's largest, with about 14 percent of the market, Noto said. And the impending merger of British Petroleum PLC and Amoco Corp. will create the third largest, with a market share likely in double digits, he said.

Other customer issues, such as how the two companies' credit cards will be combined, haven't been addressed yet.

The American Petroleum Institute, the industry's Washington-based trade group, estimates Exxon Mobil will have less than 12 percent of the U.S. refining capacity and about 7 percent worldwide. It will own only about 1 percent of worldwide oil reserves, the API estimated.

What that means is that no one company - not even the huge Exxon Mobil - will be big enough to control world prices, said John Lichtblau, chairman of the Petroleum Industry Research Foundation in New York.

Still, the sheer size of this merger is daunting.

In 1997, Exxon earned $4.7 billion; Mobil earned $2.2 billion. The combined company will have wells, gas stations and refineries around the globe.

Initial estimates suggest that 9,000 of the companies' combined work force of 123,000 likely will be cut, Raymond said, although analysts have said the figure could go as high as 20,000. About 40 percent of the total work force is in the United States, and Raymond said job cuts ``will be spread around the world. Every corner of Exxon and Mobil will be affected by this merger.''

The Exxon-Mobil deal is subject to scrutiny by regulators in the United States and other countries where the companies operate. Raymond said mid-1999 is the target for closing the deal.

Mobil shareholders will receive 1.3201 shares of Exxon for each share of Mobil held. Current Exxon shareholders will own about 70 percent of the combined company.

JUST HOW BIG?

How a merged Exxon-Mobil would compare with a few other major U.S. companies:

Company 1997 revenue (in billions)

Exxon-Mobil $186.2 (x)

General Motors $166.4

Wal-Mart $118

General Electric $88.5

IBM  $78.5

Lockheed Martin $28.1

Coca-Cola $18.9

Microsoft $14.5

(x) combined 1997 revenue for Exxon and Mobil

SOURCE: Bloomberg News, Mobil

CAPTION(S):

Photo, Chart

PHOTO (Color) Exxon Corp. Chairman Lee Raymond, left, and Mobil Corp. Chairman and CEO Lucio Noto announce the merger of their two companies.

Kathy Willens/Associated Press

CHART: JUST HOW BIG? (see text)

The Washington Post, Associated Press