	bp to offer billion dlrs for standard shares british petroleum co plc bp l said it intended to make a tender offer for the pct of standard oil co srd n it does not already own at dlrs a share cash for a total of billion if the offer is fully accepted the offer would be made through its bp north america inc unit and was intended to commence not later than april the offer would not be conditional on any minimum number of shares being tendered bp said in a statement the dlr a share price was based on its own valuation as well as those of its financial advisers it took into account reviews of both public and non public information standard closed in new york last night at dlrs down dlrs bp shares dropped on the announcement to p from p at last night s close about a third of the cash payable would be met from bp s own resources the remainder would come from new borrowings partly from banks under a four year committed revolving credit facility and partly from a a new u s dlr commercial paper programme the company said it was in the course of arranging these facilities bp chairman sir peter walters said that the group s investment in standard was its largest single asset full ownership would enable investment and operating decisions to be made without the limitations of a minority interest bp also believed the uisition represented the optimum use of its financial resources it was confident oil prices were likely to remain within a range sufficient to justify the investment walters added that it also felt that due to management changes in standard could now operate successfully even in a lower oil price environment standard s net assets at end were billion dlrs and in the year it reported a loss of billion dlrs before tax and before an extraordinary item of mln dlrs analysts said that the move by bp had come as a surprise one noted that it was not immediately clear why the group should spend so much money buying a company it already controlled bp could also have bought up the remainder of standard shares considerably cheaper had it moved six months ago it was also unclear what effect the tender would have on the u k government s recent announcement that it intended to dispose of its remaining pct stake in bp sometime in the financial year analysts said analyst paul spedding of brokers kleinwort grieveson noted that any effect on the government sale of its stake in bp would depend on the reaction of the markets the deal would probably push bp s gearing up to around pct from pct currently he said however with the likelihood that oil prices would not repeat last year s rapid drop the prospects for standard returning to profitability this year and bp benefitting from its cash flow were good standard was a high cost oil producer the analysts noted spedding noted that it needed about dlrs a barrel to make money and at about dlrs a barrel revenue from production and its downstream activities would push it comfortably into surplus bp initially took a stake in standard following the discovery of oil in alaska s prudhoe bay in bp had inadequate distribution facilities in the u s while standard which was strong on marketing and refining was short on crude oil the analysts said that bp had promoted a major management reorganisation of standard in the past year the probability that much of the shake up at standard was now complete was one possible factor behind the timing of the tender offer spedding said bp s willingness to take hard decisions such as major balance sheet write offs and the sale of assets had been well received in the markets the lower costs that should now be possible especially after the rationalisation of the loss making minerals division should allow the benefits of an oil price recovery to come straight through to profits without being cut back by other sectors reuter 
