Oregon Department of Justice

Attorney General Ellen F. Rosenblum

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Attorney General Allows Valero/UDS Merger With Divestiture of Certain Holdings

December 18, 2001

Attorney General Hardy Myers today announced the filing of a complaint and stipulated judgment allowing the merger of Valero Energy Corporation and Ultramar Diamond Shamrock Corporation (UDS) with both companies agreeing to divestiture of certain holdings. The complaint and judgment were filed in the U.S. District Court for the District of Oregon in Portland.

A similar judgment was filed by the California Attorney General in the U.S. District Court for the Central District of California. The Federal Trade Commission approved a consent decree on the merger with final approval expected after the public comment period expires.

The two Delaware corporations, Valero and UDS, both own oil refineries in California. Some of the gasoline produced in the refineries is transported and sold in Oregon, primarily to unbranded wholesale gasoline companies, and through exchange agreements with major oil companies.

In examining the merger, government authorities found that the acquisition of UDS by Valero would not only eliminate one of the limited number of West Coast oil refiners but the market also would lose a competitor for the bulk sale of gasoline to wholesalers.

Under the judgment, Valero must sell the Golden Eagle refinery in Avon, California to another company and divest some gasoline stations in California. The sale must be made in the next year with the companies reporting, every 60 days, all activities connected with the possible sale of the properties. Written reports on all efforts made by the defendants to divest and comply with the agreement are due every 60 days until the divestiture is complete. The judgment gives Oregon the authority to review and approve the new buyer of the refinery and gasoline stations.

If, after one year, the defendants have failed to comply with the judgment, the Oregon Department of Justice, in consultation with the FTC and California Justice, may appoint a trustee to complete the divestiture.

"This divestiture will maintain competition in the refining, bulk supply and wholesale markets in California and Oregon," Myers said.

Oregon Justice will be reimbursed approximately $69,000 for attorney fees and investigative costs. Justice also is entitled to a supplemental award of up to $20,000 for the time spent in reviewing and approving the buyer of the divested assets.

Consumers wanting more information on the Valero/UDA merger may call the Attorney General's consumer hotline at (503) 378-4320 (Salem area only), (503) 229-5576 (Portland only) or toll-free at 1-877-877-9392. Justice is online at www.doj.state.or.us.

Contact:

Jan Margosian, (503) 947-4333 (media line only) jan.margosian@doj.state.or.us |
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