Union Texas tender offer still on despite unrest

Union Texas tender offer still on despite unrest

NEW YORK (Reuters): Atlantic Richfield Co. said on Monday that its planned $3.3 billion acquisition of Union Texas Petroleum Holdings Inc. would not be derailed by escalating unrest in Indonesia, where both have large interests.

"The tender offer remains in effect," said Al Greenstein, a spokesman for the Los Angeles-based oil major.

Violence in Indonesia, where 37 percent of Union Texas's reserves and 49 percent of 1997 production are located, has pushed the Houston-based company's shares down around $27.81 each, below the $29 per share offered by ARCO on May 4 and off a $28.75 closing high following the deal's announcement.

ARCO stock fell 75 cents on Monday to $79.06, off from Thursday's close of about $80.81.

While noting that most of Union Texas's Indonesian operations are a long way from the violence of urban centers, BT Alex. Brown analyst Adam Sieminski said concerns that oil and gas operations there could be affected had hit the share price of both companies.

"The market got jitters that ARCO might use the unrest as an excuse to amend or unwind its purchase agreement...These concerns seem largely exaggerated in our view," he said.

Union Texas said it had evacuated 15 expatriate employees and their families from Jakarta, adding that its oil and gas wells in the country, mostly in Kalimantan, continued pumping.

"There has been no disruption at our operations," said spokeswoman Carol Cox.

The current spate of political violence in Indonesia has claimed 500 lives and forced a number of foreign companies to evacuate employees.

ARCO announced last week that it would evacuate its foreign workers and their families, around 320 people, from the troubled Asian country, after saying "the scope for violence" in Indonesia had increased.

Indonesia accounts for around five percent of ARCO's historical earnings and Greenstein too said that output was continuing on schedule.