To win government approval of the deal, Chevron- Texaco likely will have to sell several U.S. refineries. To avoid challenges based on antitrust concerns, Tyler Dann, an oil industry expert with Banc of America Securities, Houston, believes the companies "need to take a pre-emptive strike and sell assets to satisfy regulators as soon as possible." John Watson, Chevron's chief financial officer, believes it would be in the country's best "national energy interests" for the Texaco takeover to win quick approval because the combined company would be able to better compete with Netherlands-based Shell and London-based BP Amoco.
Oil analysts believe that the union between Chevron and Texaco will prove to be more compatible than some of the industry's other recent mergers. Even as the two companies competed against each other, they shared a business bond for decades. For the last 65 years, they have co-owned a joint venture called Caltex Corp., which sells 1.8 million barrels of crude oil and petroleum products per day and operates in 55 countries.
Chevron tried to purchase Texaco in 1999, but those talks broke down over disagreements about price and issues of control. Chevron executives could not comment on how the takeover may affect each company's lubricants and heat transfer fluids business.