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The Federal Trade Commission is expected next week to approve Chevron Corp.’s $45 billion acquisition of Texaco Inc., sources involved in the transaction said Aug. 28. The matter could be raised at a commission meeting scheduled for Sept. 4, though sources said it is more likely to be approved later in the week in a so-called walk-around vote, in which FTC commissioners would give their consent to the divestiture agreement without formally meeting to discuss it. In a prospectus filed Tuesday with the Securities and Exchange Commission, Texaco said a preliminary agreement with the FTC staff would require it to sell its investments in Equilon Enterprises LLC and Motiva Enterprises LLC, which are joint ventures in the U.S. refining, marketing and transportation businesses. Texaco Refining and Marketing Inc., a unit of Texaco, owns 44 percent of Equilon, with the rest controlled by Shell Oil Co. Texaco’s TRMI East Inc. unit owns 35 percent of Motiva, with the rest owned by Shell and Saudi Refining Inc. Under terms of the draft decree, Texaco must first try to sell the Equilon interest to Shell and the Motiva interest to Shell or Saudi Refining before closing the deal. If a deal cannot be reached, Texaco would transfer its stake in both joint ventures to a trust. A divestiture trustee appointed by the FTC would be required to sell the Texaco stakes within eight months. The trustee would give Shell and Saudi Oil first shot at buying out Texaco’s interest for 90 percent of its fair-market value. If the parties cannot agree on the assets value, the joint ventures would be appraised in a process that could extend for 120 days. If Shell and Saudi Oil fail to exercise their exclusive right to buy the Texaco joint venture stakes, then the trustee would be free to solicit bids from third parties. Shell and Saudi Oil also could submit bids during this stage. If multiple bids are received, Chevron and Texaco would decide who buys the assets. The draft decree does not impose a minimum price for the joint venture stakes, which means the trustee would be required to accept a low-ball bid if after eight months no one else has made a play for the assets. The companies disclosed many of these details in an earlier version of the prospectus filed Aug. 10. Texaco said the book value of its stake in the two joint ventures is $2.8 billion and its share of the combined after-tax earnings is $211 million. Analysts have said Texaco’s stake in the joint ventures could be worth as much as $7 billion, though the company reportedly is seeking closer to $5 billion. Besides selling its share of Equilon and Motiva, the draft consent decree also requires Texaco to unload U.S. natural gas processing and transportation facilities and an aviation fuel marketing business. Texaco said the combined book value of these assets is $82.2 million, which it deemed “immaterial.” Shareholders of White Plains, N.Y.-based Texaco and San Francisco-based Chevron are scheduled to vote Oct. 9 on the deal, which calls for each Texaco share to be exchanged for 0.77 shares in the combined company. The final prospectus is set to be mailed today. Shareholders of record as of Aug. 20 are eligible to vote, according the SEC filing. Copyright (c)2001 TDD, LLC. All rights reserved.

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