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Filed by Chevron Corporation Pursuant to Rule 425 under the Securities Act
of 1933 and deemed filed pursuant to Rule 14a-6 under the
Securities Exchange Act of 1934
Subject Company: Texaco Inc.
Commission File No. 333-54240
Date: September 7, 2001
Except for the historical and present factual information contained
herein, the matters set forth in this filing, including statements as to the
expected benefits of the merger such as efficiencies, cost savings, market
profile and financial strength, and the competitive ability and position of the
combined company, and other statements identified by words such as
"anticipates," "expects," "projects," "plans," and similar expressions are
forward-looking statements within the meaning of the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995. These forward-looking
statements are subject to risks and uncertainties that may cause actual results
to differ materially, including the possibility that the anticipated benefits
from the merger cannot be fully realized, the possibility that costs or
difficulties related to the integration of our businesses will be greater than
expected, the impact of competition and other risk factors relating to our
industry as detailed from time to time in each of Chevron's and Texaco's reports
filed with the SEC.
Chevron has filed a Registration Statement on Form S-4 with the SEC and
Texaco has filed a Definitive Proxy Statement on Schedule 14A with the SEC.
These filings contain a definitive joint proxy statement/prospectus regarding
the proposed merger transaction between Chevron and Texaco. Investors are urged
to read this joint proxy statement/prospectus and any other relevant documents
filed with the SEC because they contain important information. The joint proxy
statement/prospectus is being sent to the stockholders of Chevron and Texaco
seeking their approval of the proposed transaction. In addition, you may obtain
the documents free of charge at the website maintained by the SEC at
www.sec.gov. Also, you may obtain documents filed with the SEC by Chevron free
of charge by requesting them in writing from Chevron Corporation, 575 Market
Street, San Francisco, CA 94105, Attention: Corporate Secretary, or by telephone
at (415) 894-7700. You may obtain documents filed with the SEC by Texaco free of
charge by requesting them in writing from Texaco Inc., 2000 Westchester Avenue,
White Plains, New York 10650, Attention: Secretary, or by telephone at (914)
253-4000.
Chevron and Texaco, and their respective directors and executive
officers, may be deemed to be participants in the solicitation of proxies from
the stockholders of Chevron and Texaco in connection with the merger.
Information about the directors and executive officers of Chevron and their
ownership of Chevron stock is set forth in the proxy statement for Chevron's
2001 annual meeting of stockholders. Information about the directors and
executive officers of Texaco and their ownership of Texaco stock is set forth in
Texaco's annual report on Form 10-K for the year ended December 31, 2000.
Investors may obtain additional information regarding the interests of such
participants by reading the definitive joint proxy statement/prospectus.
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* * *
[Joint Press Release Issued by Chevron Corporation and Texaco Inc.
on September 7, 2001]
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U.S. FEDERAL TRADE COMMISSION APPROVES
MERGER OF CHEVRON AND TEXACO
SAN FRANCISCO, Calif. and WHITE PLAINS, N.Y. (Sept. 7, 2001) -- Chevron Corp.
and Texaco Inc. today confirmed that the U.S. Federal Trade Commission (FTC) has
approved a consent order that will allow the two companies to complete their
previously announced merger.
The new company, ChevronTexaco Corporation, will rank among the world's largest
energy companies and will be highly competitive across all energy sectors.
Separately, the companies have negotiated a consent decree with the attorneys
general of 12 U.S. states. In addition, the companies have obtained necessary
regulatory approvals from the European Union and several countries where the two
companies have major operations.
"Today marks a critically important milestone as we move to establish a premier
energy company with the world-class assets, talent, financial strength and
technology to achieve superior results," said Chevron Chairman and CEO David J.
O'Reilly, who will lead the new company in the same capacity.
"Our integration planning since announcing the merger last October has gone
exceptionally well. Upon receiving stockholder approval, we will be ready to
start operating effectively as one company."
Texaco Chairman and CEO Glenn F. Tilton said, "The new ChevronTexaco will bring
together two great companies with long histories of success and innovation to
tackle the new challenges we face in meeting the energy needs of our customers
and partners.
"We are fully prepared to comply with all of the conditions of the consent order
and look forward to completing the merger and creating a great new energy
company," added Tilton, who, along with Richard H. Matzke, vice chairman of
Chevron, will serve as vice chairman of ChevronTexaco.
Chevron and Texaco will satisfy the following conditions listed in the consent
order to complete the merger:
o Texaco will divest its interests in the U.S. downstream joint ventures Motiva
Enterprises LLC and Equilon Enterprises LLC. If Texaco is not able to complete
a sale of its interest in Motiva to Shell and Saudi Refining, Inc., and its
interest in Equilon to Shell prior to the merger, it will place the stock of
the Texaco subsidiaries that hold those interests in a Divestiture Trust just
prior to merger close for sale within eight months of the merger date.
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o Subject to certain conditions, Texaco will extend its license of the Texaco
brand to Equilon and Motiva on an exclusive basis until June 30, 2003, and on
a non-exclusive basis until June 30, 2006.
o ChevronTexaco will divest Texaco's interest in the Discovery Pipeline System
within six months of the merger date, and Texaco will resign as operator of
the System.
o ChevronTexaco will divest Texaco's interest in the Enterprise Fractionating
Plant in Mont Belvieu, Texas, within six months of the merger date.
o Texaco will divest a portion of its U.S. general aviation business.
Chevron and Texaco will seek approval of the merger by their respective
stockholders at separate stockholder meetings scheduled for Oct. 9 in Houston,
Texas.
The merger joins two leading energy companies and long-time partners. The new
company will have world-class upstream positions in reserves, production and
exploration opportunities; an integrated, worldwide refining and marketing
business; a global chemicals business; expanded growth platforms in natural gas
and power; and industry-leading skills in technology innovation.
ChevronTexaco will have a combined enterprise market value of more than $100
billion, assets of $83 billion, net proved reserves of 11.5 billion barrels of
oil equivalent (BOE), daily production of 2.7 million BOE and operations
throughout the world. In the United States, ChevronTexaco will be the third-
largest producer of oil and gas. Its Chevron, Texaco and Caltex petroleum
products will be marketed in 180 countries. (Caltex is a 50-50 refining and
marketing joint venture started by Chevron and Texaco in 1936, operating in
Asia, Africa and the Middle East.)
In the merger, Texaco stockholders will receive .77 shares of ChevronTexaco
common stock for each share of Texaco common stock they own, and Chevron
stockholders will retain their existing shares.
The FTC review process was triggered by the filing last year of notice and
information about the merger under the Hart-Scott-Rodino Antitrust Improvements
Act.
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[Letter from David J. O'Reilly, Chairman of the Board and Chief Executive
Officer of Chevron Corporation, to Chevron employees, distributed on
September 7, 2001]
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I'm delighted to report that the U.S. Federal Trade Commission (FTC) has
completed its review and has approved a consent order allowing us to move
forward with our merger with Texaco. The resulting new company -- ChevronTexaco
Corp. -- will rank among the world's largest and most competitive energy
companies.
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With this important milestone behind us, our next step is to seek merger
approval by the stockholders of both Chevron and Texaco at separate stockholder
meetings scheduled for October 9 in Houston, Texas. The attached news release
further explains this important step toward merger completion. The release,
along with questions and answers for employees, will be posted on go.chevron
later today.
Since we announced the merger last October, teams of employees from Chevron have
been working diligently with counterparts from Texaco and Caltex on integration
planning. With the FTC announcement, that effort will accelerate as we make
certain we will be ready to start operating effectively as one company upon
stockholder approval.
Along with reviews from state attorneys general, the European Union and other
countries, the regulatory review process is now essentially complete. While the
consent order contains a number of issues that must be addressed, the most
significant, as we envisioned, is the requirement for Texaco to divest its
interests in the U.S. downstream companies, Equilon and Motiva. Texaco has been
in ongoing discussions with Shell and Saudi Refining, Inc. over a sale of these
interests. If Texaco is not able to reach an agreement prior to closing the
merger, it will place the stock of the Texaco subsidiaries that hold those
interests in a Divestiture Trust just prior to merger close for sale within
eight months of the merger date. Therefore, the trust enables us to complete the
merger without delay.
This is a historic time for us. Our companies have been both competitors and
partners in various businesses around the globe for several decades. Now we are
building a new company that will be highly competitive across all energy
sectors.
What is remarkable about this milestone is that we have been able to achieve it
while continuing an outstanding record of performance by staying focused on our
jobs and getting the work done in a safe, efficient and reliable manner. I thank
you for that and commend you for your efforts and commitment.
With today's important regulatory approval, I expect the pace of integration
planning will intensify. I know how demanding merger planning can be, but it
remains important for all of us to focus on our day-to-day work. It is equally
important to remind you that we remain separate, competing companies and will
remain so until both companies obtain stockholder approval. Please remember to
follow all legal guidelines as you interact with people from Texaco.
I know how interested all of you are in our progress. Certainly, today's news is
another high point in our goal to combine Chevron, Texaco and Caltex and to
realize the full potential of ChevronTexaco. We will continue to keep you
updated as frequently as possible, as we have done throughout this transition
period.
New challenges and growth opportunities lie ahead. Your collective commitment,
energy and talent will help us forge the new ChevronTexaco.
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[Questions and Answers distributed to Chevron employees on September 7, 2001]
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QUESTIONS AND ANSWERS
REGULATORY APPROVALS AND NEXT STEPS
1. WHAT DOES THE U.S. FEDERAL TRADE COMMISSION (FTC) CONSENT MEAN FOR THE
CHEVRONTEXACO MERGER? FTC consent is one of the most important milestones
en route to completion of the merger. The next step is for Chevron and
Texaco to seek approval of the deal for the new ChevronTexaco by their
respective stockholders. Separate stockholder votes are scheduled for
Oct. 9 in Houston.
2. WHAT ARE THE REQUIREMENTS OF THE CONSENT ORDER? Chevron and Texaco will
satisfy the following FTC conditions, listed in the consent order, to
complete the merger:
o Texaco will divest its interests in the U.S. downstream joint ventures
Motiva Enterprises LLC and Equilon Enterprises LLC. If Texaco is not able
to complete a sale of its interest in Motiva to Shell and Saudi Refining,
Inc., and its interest in Equilon to Shell prior to the merger, it will
place the stock of the Texaco subsidiaries that hold those interests in a
Divestiture Trust just prior to merger close for sale within eight months
of the merger date.
o Subject to certain conditions, Texaco will extend its license of the Texaco
brand to Equilon and Motiva on an exclusive basis until June 30, 2003, and
on a non-exclusive basis until June 30, 2006.
o ChevronTexaco will divest Texaco's interest in the Discovery Pipeline
System within six months of the merger date, and Texaco will resign as
operator of the System.
o ChevronTexaco will divest Texaco's interest in the Enterprise Fractionating
Plant in Mont Belvieu, Texas, within six months of the merger date.
o Texaco will divest a portion of its U.S. general aviation business in
California, Alaska, Washington, Idaho, Nevada, Oregon, Utah, Arizona,
Louisiana, Mississippi, Alabama, Georgia, Florida and Tennessee. Texaco
has reached an agreement to sell this business to Avfuel Corp. of Ann
Arbor, Michigan, with closing occurring on the merger date or shortly
thereafter.
3. ARE YOU CONFIDENT THE MERGER WILL BE COMPLETED NOW? The FTC's approval of
the consent order removes the last major obstacle to closing the merger,
except for the stockholder votes. We are optimistic that the stockholders
of both companies will approve the merger proposals that have been
submitted to them because we believe that the merger's completion is in the
best interests of the stockholders, as well as those of the companies and
the respective employees of both companies.
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4. WHEN DOES THE FTC'S PUBLIC COMMENT PERIOD BEGIN AND DO YOU ANTICIPATE IT
WILL SURFACE ISSUES THAT MIGHT DELAY MERGER COMPLETION? The 30-day public
comment period begins the day following the FTC's announcement. The FTC has
conducted a thorough review of the proposed merger, and we are confident
that the merger will move forward to completion.
5. WHAT'S THE STATUS OF APPROVALS FROM ANY U.S. STATES? We have reached
agreement on a consent decree with the Attorneys General of 12 states:
Alaska, Arizona, California, Florida, Hawaii, Idaho, Nevada, New Mexico,
Texas, Oregon, Utah and Washington, and the consent decree is being
presented to the United States District Court in Los Angeles for approval.
6. WHAT ARE THE CONDITIONS OF THE STATE CONSENT DECREE WITH REGARD TO
CALIFORNIA CRUDE REFINERS? The state consent decree will require
ChevronTexaco to supply crude oil to two California refiners, San Joaquin
Refining Company and Kern Oil and Refining Company, pursuant to agreements
providing for specified volumes and prices. Any volume reduction or price
increase, or termination of the agreements, must be approved by the
California State Attorney General's Office.
7. WHAT IS THE STATUS OF APPROVALS FROM THE EUROPEAN UNION OR OTHER COUNTRIES?
The merger has received the approval of the European Union and certain
countries where both companies operate.
8. WHAT'S THE FIRST DAY CHEVRONTEXACO WILL BE OPERATIONAL? Following
stockholder approval on October 9, ChevronTexaco will be operational on
October 10.
DIVESTITURES
9. WHAT HAPPENS IF SHELL DOES NOT PURCHASE TEXACO'S PART OF EQUILON OR
MOTIVA PRIOR TO MERGER CLOSE? If Texaco is not able to complete a sale of
its interests in Motiva to Shell and Saudi Refining Inc., and its interest
in Equilon to Shell, prior to merger close, it will place the stock of the
Texaco subsidiaries that hold those interests in a Divestiture Trust just
prior to merger close for sale within eight months of the merger date. By
doing so, ChevronTexaco will be able to complete the merger.
10. HAS THE TRUSTEE BEEN SELECTED TO OVERSEE THE DIVESTITURE TRUST? There are
actually three trustees. Robert A. Falise has been named the Divestiture
Trustee with responsibility for overseeing the sale of Texaco's interests
in Equilon and Motiva; Joe B. Foster has been named Operating Trustee to
oversee Texaco's interests in Equilon and John Linehan has been named
Operating Trustee to oversee Texaco's interests in Motiva.
11. IF TEXACO PUTS ITS U.S. REFINING AND MARKETING INTERESTS IN A TRUST UNTIL A
BUYER IS FOUND, WHO RECEIVES THE DIVIDENDS? The dividends will be paid to
ChevronTexaco.
12. WHEN THE SALE IS COMPLETED, WHO RECEIVES THE PROCEEDS? The proceeds will go
to ChevronTexaco.
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13. WHAT HAPPENS IF A BUYER CANNOT BE FOUND FOR EQUILON AND MOTIVA IN 8 MONTHS?
The Divestiture Trust can request an extension from the FTC.
14. CAN SHELL OR SAUDI REFINING, INC. BID FOR THE ASSETS ONCE THEY ARE PLACED
INTO A TRUST? Yes.
15. DOES THE TRUST AFFECT THE MANAGEMENT OF EQUILON AND MOTIVA? No. Equilon and
Motiva have existing management teams that are responsible for day-to-day
management and operations of the respective companies. However, Texaco's
representatives on the Members Committees of Equilon and Motiva will resign
when the trust arrangement is implemented.
16. CAN YOU PROVIDE DETAILS OF THE DISCOVERY SYSTEM? Discovery Producer
Services LLC is a joint venture of Texaco (33.3%), The Williams Companies
(50%) and Agip Petroleum Company Inc. (16.7%). The system includes a 600
mmcfd natural gas gathering pipeline in the Gulf of Mexico, a cryogenic
processing facility in Larose, Louisiana and a fractionating unit in
Paradis, Louisiana.
17. CAN YOU PROVIDE DETAILS OF THE ENTERPRISE FRACTIONATING PLANT? Texaco owns
a 12.5% interest in the Enterprise Fractionating Plant, with remaining
interests held by Enterprise Products Company, Duke Field Services and
Burlington Resources. The plant has a capacity of 210,000 barrels per day.
The facility fractionates natural gas liquids into ethane, propane,
isobutane, butane and natural gasoline.
18. CAN YOU PROVIDE DETAILS OF TEXACO'S GENERAL AVIATION FUEL BUSINESS AND ITS
DIVESTITURE? Texaco markets general aviation fuel throughout the United
States. In order to address FTC market concentration concerns, Texaco has
entered into an agreement with Avfuel Corporation for that company to
purchase the majority of its general aviation business in California,
Alaska, Washington, Idaho, Nevada, Oregon, Utah, Arizona, Louisiana,
Mississippi, Alabama, Georgia, Florida and Tennessee. The completion of the
sale will be concurrent with or soon after merger close.
DOWNSTREAM: RETAIL BRANDING AND MARKETING ISSUES
19. HOW WILL THE TEXACO BRAND BE MANAGED IN THE U.S.? Subject to certain
conditions, Texaco will extend its license of the Texaco brand to Equilon
and Motiva on an exclusive basis until June 30, 2003, and on a
non-exclusive basis until June 30, 2006. Subject to certain restrictions,
ChevronTexaco will be able to market Texaco-branded motor fuels in the U.S.
after June 30, 2003.
20. WILL ALL THE TEXACO STATIONS BECOME CHEVRON STATIONS? No. Subject to
certain conditions, in the U.S., Equilon and Motiva will have exclusive
licenses for the Texaco brand for motor fuels until June 30, 2003 and
non-exclusive licenses until June 30, 2006. Subject to certain
restrictions, ChevronTexaco will be able to market Texaco-branded motor
fuels in the U.S. after June 30, 2003. In Europe, West Africa, Latin
America and the Caribbean the Texaco brand will be maintained.
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21. WHAT HAPPENS TO LUBRICANTS AND THE HAVOLINE BRAND? Texaco currently
markets premium automotive and industrial lubricants worldwide, including
Havoline, which is marketed by Caltex in Asia and Equilon in the U.S. This
business is not addressed by the FTC consent order. It is planned that
ChevronTexaco will continue to market these products on a worldwide basis.
22. WHAT HAPPENS TO THE TEXACO XPRESS LUBE OUTLETS IN THE U.S.? The Texaco
Xpress Lube outlets in the U.S. are assets of Equilon and Motiva or their
customers. That ownership will not be affected by the merger. However,
ChevronTexaco will have a non-exclusive right to use the Texaco Xpress Lube
name in the U.S. after the merger.
23. WHERE DO CUSTOMERS OR CREDIT CARD HOLDERS TURN FOR ANY QUESTIONS? This
regulatory approval step does not affect retail customers, and they can
continue to utilize the resources at their disposal for answers to any
questions they have.
24. CAN U.S. CONSUMERS USE CHEVRON CREDIT CARDS AT TEXACO STATIONS AND TEXACO
CREDIT CARDS AT CHEVRON STATIONS? No such arrangements are contemplated at
this time.
25. IF SOMEONE IS CURRENTLY A CHEVRON JOBBER AND A TEXACO JOBBER, WILL THAT
BECOME ONE CONTRACT? All existing contracts will be honored. Chevron
contracts will remain separate from any contracts with Equilon and Motiva.
26. WILL THE NEW COMPANY KEEP THE TEXACO BRAND AND WHERE? ChevronTexaco will
maintain the Texaco brand, particularly in markets where it already has a
presence, subject to the terms of the FTC consent order and the state
consent decree. In the U.S., subject to certain conditions, the Texaco
brand will be licensed to Equilon and Motiva on an exclusive basis until
June 30, 2003 and a non-exclusive basis until June 30, 2006. While no
decision has been made about ChevronTexaco's use of the Texaco brand in the
U.S. after June 30, 2003, subject to certain restrictions, ChevronTexaco
will be able to market Texaco-branded motor fuels in the U.S. following the
expiration of the exclusive license with Equilon and Motiva.
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