Fertilizing the Oil Business

Gasoline and fertilizer seem an unlikely combination, but this year half a dozen U.S. oil companies have linked with fertilizer manufacturers, or started to do so. Among the major deals: Kerr-McGee merged with Baugh Chemical, Cities Service picked up Tennessee Corp., Socony Mobil has bid for Virginia-Carolina Chemical. Last week Pittsburgh's Gulf Oil, whose sales of $2.8 billion in 1963 made it the nation's eighth largest company, announced one of the biggest deals of all.

For about $150 million, Gulf intends to acquire Kansas City's young and spunky Spencer Chemical Co., which last year earned $6,500,000 on sales of $106 million. Gulf, whose cashbox is bulging from oil gushers in Kuwait, was moved by the same considerations that drew its competitors to fertilizer companies. Ammonia from crude oil is a key ingredient in fertilizers, and Spencer has been buying a lot of it from Gulf. U.S. fertilizer sales have been growing 10% a year, as farmers pour on more of it to coax higher output from their Government-limited acreage allotments. Meanwhile, the oilmen have been itching to diversify because gasoline wars have hit prices (last week in the Midwest they were down another penny per gallon to 10.75-c- wholesale).

To Gulf Chairman William K. Whiteford, 62, a rugged, casual oilman who started out as an Oklahoma roustabout, Spencer seemed ideally suited to become a Gulf subsidiary. Spencer's President John C. Denton, 44, was just as eager to accept Gulf's offer. He felt a need for more expansion capital to meet sharpening competition, especially in the plastic lines Spencer also makes. Spencer received several other suitors before settling on Gulf. Mrs. Helen Spencer, the largest shareholder, with 14% of the 3,000,000 outstanding shares, particularly liked what she felt was Gulf's "empathy" toward the firm that her late husband started from scratch in 1940.

This file is automatically generated by a robot program, so reader's discretion is required.