The Federal Trade Commission has informed Exxon Corp. that it is "giving serious consideration" to recommending court action to block -- at least temporarily -- the giant oil company's proposed $1.17 billion takeover of Reliance Electric Co.
In a letter to Exxon, the FTC antitrust staff said a preliminary investigation of the proposed acquisition "gives rise to serious antitrust concerns."
FTC antitrust official Dan Schwartz emphasized in an interview yesterday, however, that "no final decision on any action has been made. The point of the letter is to indicate we do have a serious investigation underway."
Exxon made the FTC letter public, surprising FTC oficials, who consider the investigation to be still in prelimiary stages.
The takeover was proposed by Exxon six weeks ago when the oil company announced that it had developed a new energy-saving electric engine, and decided that rather than manufacture the engine itself, it would purchase Reliance Electric Co. of Cleveland and have that company build it.
Reliance, Exxon said, already had the expertise to manufacture the engine while Exxon would have to start an entirely new company to do the job.
Exxon is currently offering $72 a share for Reliance common stock and $202.72 a share for the series A prefereed stock of the $966 million electrical equipment manufacturer.
The FTC letter requests Exxon to supply a schedule which the company will follow in responding to the FTC's request for further information about the merger.
Exxon said it would respond to the FTC request "at the earliest practicaltime."