NEW YORK -- France's TotalFina Elf may not be the only European oil company that may make a bid for Conoco Inc. While the French company reportedly has expressed interest in cutting in on Phillips Petroleum Co.’s plans to acquire the Houston-based company, some say Royal Dutch/Shell could be waiting in the wings to make a move, and ChevronTexaco Corp. may not be far behind.
According to a report in Britain's Sunday Telegraph, TotalFina Elf was considering a bid for Conoco. But according to a Reuters report yesterday, Royal Dutch/Shell had been sizing up Conoco before Phillips made its move.
Either could still appeal to Conoco shareholders, who were offered no takeover premium in what some consider a marriage that benefits only Phillips.
Analysts on both sides of the Atlantic believe that U.S. oil industry consolidation has further to go. Totalfina made clear to shareholders last year that it wanted to be a part of that process and gain a foothold in this key market. With the $30 a barrel oil price bonanza of recent years now history, the pressure is back on the big players to find a way to grow in a sector where organic growth is stalled by a lack of viable new drilling projects and sluggish demand. Totalfina is seen as having a better chance than many of getting U.S. regulatory agreement, according to the Reuters report, though it added that Shell officials believe the Bush administration may be more lenient with regard to oil mergers than the previous administration.
One problem any counterbidder would face though is the hefty $550 million breakup fee that Phillips and Conoco have written into their deal, aimed at creating the world's sixth-largest oil company. This “poison pill” has made a many analysts skeptical that a counterbid will materialize. Nonetheless, analysts believe of Totalfina Elf Chief Executive Thierry Desmarest’s efforts in acquiring Elf indicate he may go to great lengths to make a deal.
