SAN RAMON, Calif. -- Chevron USA Inc. and USA Petroleum Corp. have terminated their agreement for the sale to Chevron of 122 USA Petroleum retail gas stations.
The companies did not offer a reason for the decision to end the deal, announced in mid-July. Chevron had said that it intended to operate the USA Petroleum stations itself, an unexpected move given the trend of most Majors to divest company-owned and -operated stores to concentrate on refining and wholesale networks. And in early November, Senator Barbara Boxer (D-Calif.) asked the Federal Trade [image-nocss] Commission (FTC) to thoroughly review Chevron's pending acquisition of the USA Petroleum stations.
This is a relatively small transaction for us. We're not adding a huge amount of market share, Donald Campbell, Chevron's manager of media relations, told CSP Daily News when news of the transaction first broke. He said the deal did not mean the company was on a buying spree with plans to drastically change its strategy in favor of company-operated stores. California is an important market for Chevron, and we are looking for the opportunities to expand both the Chevron and Texaco brands [there].
The USA Petroleum purchase fell into an important niche for the company. We've been trying to grow our retail share in the Southwest and West, he said. From a corporate perspective, that's where we've got most of our stores. It's a niche purchase for us. It's an opportunity for us to find a way to develop more Chevron and Texaco brands. It's also an opportunity for us to have better positions to supply the market with gasoline, and that's an important factor given times when there can be supply crunches.
Cary Knuth, Chevron North America Marketing general manager of retail sales for the western region, also said at the time, "This transaction allows us to expand our ability to reliably supply our customers with high-quality gasoline with Techron,"
Of the approximately 450 company-operated stores owned by Chevron, about 300 are in California, according to Campbell. About 1,500 of the 10,000 stations in California are branded either Chevron or Texaco, a brand now exclusively owned by Chevron Corp. Chevron also has about 9,400 branded sites nationwide.
We don't operate a very high percentage of our sites, said Campbell. We're constantly evaluating our sites. There's an ebb and flow about what we buy and what we sell. This transaction was opportune. We don't have a specific strategy to dramatically expand in California, [but] we are always looking to optimize our portfolio of assets.
Campbell said USA Petroleum initiated the sale negotiations as owner John Moller looked to scale back the company's operations. After nearly 50 years, I believe it is appropriate to sell some of our retail gas station holdings, Moller said when thre deal was announced. I believe that the transition to Chevron also will be good for my customers and station employees.
While it is unclear whether they had anything to do with the termination of the sale, Boxer's concerns involved the fact that Chevron and six other large refiners supply about 90% of retail gasoline in the state, giving those companies a significant effect on retail gas prices in California by virtue of their dominant position in the market, according to her letter to FTC Chairman Deborah Platt Majoras. Chevron's acquisition of USA's assets, including its California retail stations, could further diminish independent unbranded retailers' market position and present potential anticompetitive effects for consumers, including higher retail prices, according to the letter.
Boxer has been long been concerned about the mergers of large oil companies and feared the deal could result in even less competition than there already is in California, spokesperson Natalie Ravitz said.
"I believe consumers will be better served without a continuation of consolidation that has eroded the competitive gas market over the past decade," Boxer said, according toThe Boston Globe, citing a statement concerning the termination of the Chevron-USA Petroleum deal released by the senator of Friday.
Thousand Oaks, Calif.-based USA Petroleum owns and operates retail stations primarily in California. The majority of the stations involved in the transaction currently sell USA-branded gasoline, with a small number branded Chevron and Shell.
Chevron USA is a wholly owned subsidiary of Chevron Corp., San Ramon, Calif.
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