Mobil Corp. plans to cut supply contracts with about 320 retail service stations in Texas, part of a massive divestiture the company is undertaking to win federal approval for its merger with Exxon Corp., according to people familiar with the matter.
The two oil giants have been wrestling for months with federal regulators in an effort to win the government's approval for their merger, now valued at roughly $86 billion. Federal Trade Commission officials have insisted that the companies shed thousands of retail stations on the East Coast and in California and Texas, to lessen the combined companies' power to raise fuel prices.
Sources familiar with the negotiations say that the FTC and representatives of Exxon and Mobil are close to a deal, having resolved the thorny issues of how many retail stations the companies will need to sell. An agreement with the FTC staffers could come as early as next week, these sources said, and final approval from the full commission is likely to come soon thereafter.
Lee R. Raymond, the chief executive of Exxon and Lucio A. Noto, the chief executive of Mobil, met on Monday with Robert Pitofsky, the FTC's chairman, a sign that the negotiations are nearing a conclusion.
With the Texas stations up for sale, the total number of properties being shed by Exxon and Mobil is roughly 2,400. That includes about 1,720 stations in the Washington area and elsewhere on the East Coast and an additional 360 in California. Exxon has also reportedly agreed to sell a California refinery.
In Texas, Mobil is in a joint venture with Tetco, a San Antonio company that operates 318 filing stations under the Mobil brand as part of an alliance announced last year. Mobil supplies gas to roughly 173 stations and owns the other 145.
The Fairfax-based company will cut ties with all 318 stations, according to sources, selling both its service contracts and stations to Tetco. Robert Farmer, president of Tetco Stores, said yesterday that it's premature to announce any deal.
"As far as I know, there's been no agreement struck," he said.
Officials at Exxon and Mobil declined to comment on the merger's status. "We don't comment about discussions with the Federal Trade Commission," said Mobil spokesman David J. Dickson.
The search for viable buyers for the divested stations has delayed Exxon and Mobil's planned merger, which was announced last December. The firms have put stations on the block and a few weeks ago invited their industry rivals to submit bids for the properties, which include company-owned and leased stations. A number of companies--including Sunoco Inc. and Tosco Corp.--are vying for the stations that Exxon and Mobil are selling the Northeast.
Staff writer Martha Hamilton contributed to this report.