HOUSTON -- Shell Oil Co. late yesterday announced it has reached an agreement to acquire Pennzoil-Quaker State Co. for approximately $1.8 billion in cash plus the assumption of $1.1 billion in debt. The deal is expected to close in the second half, pending review by the Federal Trade Commission and approval by Pennzoil-Quaker State stockholders.
"The addition of Pennzoil and Quaker State, the number one and two brands in the key U.S. passenger car motor oil segment, will ultimately more than replace our use of the Havoline brand and complement Shell's brand strength in diesel engine lubricants," added Rob Routs, president and chief executive officer of Shell Oil Products U.S. "Combining Shell's networks and infrastructure and Pennzoil-Quaker State Company's leading motor oil brands and portfolio of other businesses, such as its car care brands and its large network of over 2,000 Jiffy Lube stores, will be a great strategic fit and will position Shell as a leader in the U.S. lubricants and car care business.
Pre-tax benefits from the transaction are expected to total approximately $140 million per year by 2004, Routs said. One-time transaction costs and costs are estimated to be $100 million. Pennzoil-Quaker State Company will be integrated with the existing Shell Oil Products US lubricants organization and will be based in the Houston, Texas area.
