Since the Exxon-Mobil merger was announced a year ago tomorrow, Jason Yates and his wife, Loren, have spent hours worrying over the future of the business his father started.
"It's our number one topic that we talk about, read about," said Yates, 40, who runs the Yates Old Town Mobil and the Yates Kingstowne Mobil stations in Northern Virginia.
For now, the Yateses have put major life decisions--whether to move from their Fairfax home, whether to buy a new car--on hold while they anxiously await word of their fate once the massive merger of Exxon Corp. and Mobil Corp. is concluded.
The Federal Trade Commission will announce its approval of the $81 billion merger today, according to people close to the merger deliberations. In return for its approval, the FTC is requiring that Exxon and Mobil sell their interests in 2,400 service stations nationwide, including 130 Mobil outlets in the greater Washington area. The divestiture requirement--the largest ever by the FTC--covers both company-operated stations and stations run by independent owners or operators.
After the sale, Yates and other Mobil dealers would continue to display the bright-red Mobil signs, accept customers' Mobil charge cards and special debit cards, and sell gasoline with the same additives they now get from Mobil, for a period of five to 10 years, according to dealer representatives. A similar arrangement would apply to Exxon dealers whose stations are covered by the FTC's divestiture requirement.
The FTC's goal is to allow the new owners to benefit during the transition period from Mobil and Exxon's powerful brand names and market position in regions where the divestiture order applies.
But the station owners still have no idea where their gasoline will come from or whom their new landlord will be. While some potential buyers have surfaced, the new Exxon Mobil Corp. will have up to six months to come to final terms on the divestiture, dealer representatives said.
So, at this point, Yates and other Exxon and Mobil station operators still have no idea whether the change will help or harm them.
Every day, Yates receives calls from other panicked dealers who share his concerns. Yates, who worked for his father all through high school and college until taking over the business, is particularly worried about the price he will pay for gas and said a major increase "could run us right out of business."
The licensing fee and charges for additives that Mobil will receive could add several cents to the cost of a gallon of gasoline, according to some estimates.
Yates typically grosses several cents' profit per gallon, leaving very little net profit after paying his staff and overhead costs at his stations, one of which has a full-service garage.
"I'm very concerned," Yates said, "You're talking about people such as my family . . . who have all of their money and have worked holidays and weekends, put everything into the business, and I'm talking hundreds of thousands of dollars."
Some dealers say they are angered by the forced separation from Mobil even though they will still use its brand.
Gernot Brauning, 58, who runs a service station in Burke, said he has given body and soul to Mobil for 18 years. But now the station operator believes the oil giant and the FTC have abandoned him in the push to finalize Mobil's merger with Exxon.
His long-ago choice of Mobil as his fuel supplier was no accident, Brauning said. "I bought Mobil like I'd buy a Cadillac," he said. "Now I'm going to be forced to play with a lesser" oil company.
Brauning also said the merger may make his station less valuable. He recently had an $860,000 offer for his franchise, but the deal fell through when the buyer realized that the future gasoline supplier would not be the newly joined Exxon and Mobil.
"We made our decisions to get into the business, based on Mobil's performance," relationships and history, said Michael Costello, owner of Goshen Mobil in Gaithersburg, whose franchise and land are owned by Mobil. But now, the FTC is "throwing it to an unknown third party," making it uncertain what he will be paying for rent, what kind of gas he will sell and how much he will be charged by his new supplier, Costello said.
The strongest contenders for the soon-to-be-sold stations on the East Coast appear to be Tosco Corp., the nation's fifth-largest refiner and the operator of Circle K convenience stores, which sell gasoline under the 76 brand; Amerada Hess Corp., an oil company that is among the largest fuel suppliers in the New York area; and Irving Oil Co. of Saint John, New Brunswick. Irving is a family-owned company with a gasoline marketing chain that stretches across eastern Canada and into Maine.
Tosco and Irving have expressed interest in acquiring both the Exxon stations in New England and the Mobil stations in the mid-Atlantic, according to sources and published accounts.
The FTC became more involved than usual in the question of who will buy the stations, intent on finding a buyer or buyers for the stations who would be a strong competitor.
At the same time, the agency has had to step carefully, because the agency's divestiture requirements in the BP-Amoco Corp. merger triggered successful litigation by dealers who said their rights under federal legislation had been ignored.
Dealers have fought to be allowed to buy the stations themselves under a provision of the Petroleum Marketing Practices Act, a federal law that requires dealers to be given the first option to buy stations when stations are divested and the brand is changed.
Yesterday a coalition of Exxon and Mobil dealers on the East Coast sent letters to FTC Chairman Robert Pitofsky and members of Congress reiterating dealer concerns about the divestiture. Dealers hope that the buyer or buyers selected will then turn around and offer the dealers a chance to buy the stations.
Ron Harrell, a Mobil dealer with stations in Maryland and Virginia who heads a group that has raised more than $100,000 to pursue a lawsuit if necessary, said the dealers made it clear they would be willing to enter into long-term supply contracts with whatever "white knight" initially ends up with the stations.
Jim Daskal, a lawyer who represents the National Coalition of Petroleum Retailers, another dealer advocacy organization, said that allowing dealers to buy the stations would save consumers money because the mortgages would cost less than oil-company rents. He said yesterday that he believes the successful buyers will offer dealers that right.
Staff writers Kenneth Bredemeier and Yuki Noguchi contributed to this report.