Business & Finance: Socony-Vacuum Corp.

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First proposed in 1928, the merger of Standard Oil Co. of New York with Vacuum Oil Co. of New York was consummated last week by an overwhelming vote of the companies' stockholders. The law's delays had held up the merger. Only last month did the Government give up its attempt to prevent this union of two oldtime Standard Oil units (TIME, June 15). Socony has $720,305,000 assets, earned $40,246,000 last year; Vacuum has $240,545,000 assets, earned $20,393,000 last year. United, they form a company which ranks third (after Shell and New Jersey Standard) among world oil companies in total assets, which does almost 9% of the total gasoline and over 12% of the total lubricants business, in the U. S. market. As approved, the merger differs in two important respects from the original proposal: 1) the new company is known as Socony-Vacuum Corp. instead of General Petroleum Corp. (Reason: to avoid confusion with Socony's subsidiary, General Petroleum Corp. of California.); 2) the original ratio of share exchange (three Socony shares to one Vacuum) was changed to two and a half Socony shares for one,Vacuum (Reason: protests of a lusty group of Socony's California stockholders led by Lionel T. Barneson).

The merger is beneficial to Socony, essential to Vacuum. Socony is well integrated, with large production in California (General Petroleum) and the Southwest (Magnolia) and with nearly one-third of the total gasoline sales in "Soconyland" (New York and New England) as well as a major part of the kerosene business in China and India. From Vacuum it will gain an excellent line of lubricants and a distributing system which extends to every State and country (save Russia).*

For Vacuum the merger is almost a life & death matter because, one of the least integrated of the big oil companies, it has long specialized in lubricants, only lately going into gasoline, and has never had much crude production of its own. For many years after the 1911 dissolution of the Standard Oil trust, Vacuum was a particularly prosperous fragment. Lately its position in the lubricating business has been cut into by outside competition. The union with Socony means a source of crude supply as well as a large gasoline business to supplement the Vacuum line of lubricants. And for both companies it means greatly increased resources in their bitter war with Royal Dutch Shell for world oil markets.

The Socony-Vacuum consummation revived talk of another, much bigger merger of old Standard units: Standard Oil Co. (New Jersey) and Standard of California. Such a merger would span the continent, would bring together $2,381,289,000 in assets, would create by far the biggest oil company in the world. It would give an outlet to California's tremendous crude production (including half of the Kettleman Hills field) through the extensive marketing system which New Jersey has built up in the central and south Atlantic states, in Europe and Latin America.