FTC clears Tesoro-BP deal

The U.S. Federal Trade Commission will allow Tesoro to go through with its plans to buy a BP-owned refinery in southern California, bringing the two companies one step closer to sealing the deal sometime this quarter. After a nine-month investigation, the FTC determined that Tesoro’s purchase of the 266,000 barrel-a-day plant, one of the largest on the West Coast, was unlikely to result in a meaningful reduction in competition or higher gasoline prices for California consumers.
Tesoro will shell out about USD 2.38B to buy BP’s southern California assets, including the Carson refinery in Los Angeles county and its inventory. Tesoro also owns the Golden Eagle refinery in the San Francisco Bay area. Tesoro plans to combine the Carson plant with its other Los Angeles area refinery, adjacent to the Carson plant, in a move that it says will help bring manufacturing costs down by about USD 250M. The deal should more than double Tesoro’s refining capacity in California. Tesoro expects the new plant to add 50 cents per share to its 2013 earnings. As a part of the agreement, Tesoro agreed not to lay off any workers at either Los Angeles area refinery for two years. The company has also agreed to keep up its level of California blend gasoline production at those refineries for three years, and to increase its total California blend gasoline production capacity by 400 barrels a day as a safeguard against unplanned outages. Tesoro could take ownership of the refinery as early as June 1.
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