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Filed by Chevron Corporation Pursuant to Rule 425 under the Securities Act of
1933 and deemed filed pursuant to Rule 14a-12 under
the Securities Exchange Act of 1934
Subject Company: Texaco Inc.
Commission File No. 1-27
Date: December 7, 2000
Except for the historical and present factual information contained
herein, the matters set forth in this filing, including statements as to the
expected benefits of the merger such as efficiencies, cost savings, market
profile and financial strength, and the competitive ability and position of the
combined company, and other statements identified by words such as "expects,"
"projects," "plans," and similar expressions are forward-looking statements
within the meaning of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are subject to
risks and uncertainties that may cause actual results to differ materially,
including the possibility that the anticipated benefits from the merger cannot
be fully realized, the possibility that costs or difficulties related to the
integration of our businesses will be greater than expected, the impact of
competition and other risk factors relating to our industry as detailed from
time to time in each of Chevron's and Texaco's reports filed with the SEC.
Chevron and Texaco disclaim any responsibility to update these forward-looking
statements.
Chevron and Texaco will file a proxy statement/prospectus and other
relevant documents concerning the proposed merger transaction with the SEC.
Investors are urged to read the proxy statement/prospectus when it becomes
available and any other relevant documents filed with the SEC because they will
contain important information. You will be able to obtain the documents free of
charge at the website maintained by the SEC at www.sec.gov. In addition, you may
obtain documents filed with the SEC by Chevron free of charge by requesting them
in writing from Chevron Corporation, 575 Market Street, San Francisco, CA 94105,
Attention: Corporate Secretary, or by telephone at (415) 894-7700. You may
obtain documents filed with the SEC by Texaco free of charge by requesting them
in writing from Texaco Inc., 2000 Westchester Avenue, White Plains, New York
10650, Attention: Secretary, or by telephone at (914) 253-4000.
Chevron and Texaco, and their respective directors and executive
officers, may be deemed to be participants in the solicitation of proxies from
the stockholders of Chevron and Texaco in connection with the merger.
Information about the directors and executive officers of Chevron and their
ownership of Chevron stock is set forth in the proxy statement for Chevron's
2000 annual meeting of stockholders. Information about the directors and
executive officers of Texaco and their ownership of Texaco stock is set forth in
the proxy statement for Texaco's 2000 annual meeting of stockholders. Investors
may obtain additional information regarding the
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interests of such participants by reading the proxy statement/prospectus when it
becomes available.
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[Letter to All Chevron Employees Dated December 7, 2000]
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Dear Fellow Employees:
I'd like to bring you up to date on the significant progress we continue to make
with merger integration planning.
The Decision Review Board -- Dave O'Reilly, Peter Bijur, Pat Lynch and myself --
met this week in Houston.
At the meeting, we had our first look at high-level organization designs. Each
of the eight integration teams presented proposals for organization design in
its respective area. This is the first of a three-step process to complete the
overall design of the new company. We plan to announce results of this process
early next year.
We also looked at preliminary numbers combining the cost structures of Chevron,
Texaco and Caltex. By creating a baseline for what the pre-merger companies'
costs are today, we will be able to track merger synergies (or merger-related
savings) later after the merger is completed.
We also began considering initial proposals for key human resources processes,
including selection, relocation, outplacement and cultural integration. As
decisions are made in these and other important areas affecting employees, we'll
let you know.
As I've explained in previous letters, the combined recommendations from all the
teams will help us create an organization designed to compete with the best
performers in our industry.
Our merger email box for employee questions and comments has received 225
questions. Some of you have asked whether all questions and answers can be
posted on go.chevron. Starting today, we are going to post the most frequently
asked questions and answers that relate to large numbers of employees.
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I'd like to thank everyone involved in the merger integration planning effort,
including those who are picking up the slack for people who have been pulled off
their usual jobs to work on merger matters. I know that many of you are putting
in long hours directly related to this effort (or because your colleagues are
involved), and I really appreciate your dedication.
Ultimately, our success merging these companies will depend on the commitment
and hard work of the many talented people at Chevron, Texaco and Caltex. We
can't do it without you.
Thank you again for your comments and your support.
JOHN WATSON
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[Questions and Answers Made Available to Chevron Employees on December 7, 2000]
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Severance and Other People Issues
Q. Will there be a termination pay program for Chevron employees whose
employment ends as a result of the merger? If so, will it be a voluntary
program?
A. We have no plans to offer early retirement packages.
Chevron will have a termination pay program for employees whose employment ends
as a result of the merger. The precise terms of such a program and whether the
benefit will exceed Chevron's standard severance pay benefit provided in recent
years is still under consideration.
Q. When will we know about job losses?
A. As we said in our initial announcement, we anticipate the combined work force
of 57,000 will be reduced by approximately 7 percent. The transition team is
reviewing these issues and will make detailed recommendations in the coming
weeks.
Q. What will happen with Domestic Partners benefits? What will happen to
benefits in general?
A. We do not anticipate any change to existing Domestic Partners benefits in the
new company, assuming the merger is completed.
In general, we anticipate that the new company will most likely have a
consolidated benefits program (assuming the merger is completed). Decisions
about specific design for that consolidated benefits program have not been made.
Please watch for updates on go.chevron.
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Q. Will my current stock options still be in force and exercisable?
A. Yes, according to the terms of the stock option program.
Q. How will new Chevron employees be affected by the merger?
A. At this point in time, we don't know enough about how the companies might be
integrated to predict the effect of the merger on individual employees. However,
Chevron values its recent hires just as it values all Chevron employees.
Q. How will benefits be handled for Chevron employees who may have previously
been employed by Texaco?
A. The issue of prior service with Texaco cannot be addressed without a careful
consideration of Texaco's benefit plans and policies. That type of analysis has
not yet taken place. We will provide information about this as soon as it
becomes available.
Facilities, Plants, Business Units, Operations
Q. What will happen to my office, facility, plant, business unit, operations?
A. We simply don't have answers yet. As decisions are made affecting specific
businesses, operations, geographic areas, organizations and people,
announcements will be made as quickly as possible. Wherever possible, we plan to
communicate first with the people directly involved. The process for making
decisions about issues like the one you raise is well under way. Please see John
Watson's letters on go.chevron for updates on where things stand. Future letters
from John will be posted every other week, with announcements about significant
decisions posted as they occur.
Q. How will my job be affected by the merger? Will it change as a result of the
merger?
A. We simply don't have answers yet. Your particular job may or may not change,
depending on decisions yet to be made about your part of the business. As
decisions are made affecting specific businesses, operations, geographic areas,
organizations and people, announcements will be made as quickly as possible. We
apologize that we can't eliminate your sense of uncertainty at this point, but
we hope to help in that regard as quickly as possible.
Q. Can we visit Texaco facilities before we start operating them? There are
several opportunities to start saving money -- when can we get started?
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A. At this point, no assumptions should be made by anyone as to who will be
operating any facilities after the companies are integrated. And, as we've said
previously, it is critically important for legal reasons that we continue to
operate as separate, competing companies. You should not contact anyone from
Texaco unless you were in contact with them as part of your job prior to the
merger announcement. We know there are opportunities to operate the combined
organizations more efficiently, which is one of the main drivers for the merger.
As integration plans are developed for each part of the company, the process and
timing for communication among the people involved from both organizations will
be clear. This will be communicated as developments occur.
Merger
Q. Will Chevron take this opportunity to move from California to a lower-cost
area?
A. ChevronTexaco will be headquartered in San Francisco. Thousands of employees
have, over the past few years, moved to San Ramon, Calif., and to Houston, among
other locations. While some organizations may include location changes as part
of the integration process, we have no plans to move the company out of
California.
Q. What did Chevron learn from the Gulf merger, and how are those lessons being
applied?
A. We learned a great deal. We learned that being open and forthright with
people involved in and affected by the process, as well as communicating
frequently as decisions are made, is critical to success. We also learned that
too much deliberation can be counterproductive and can slow things down
unnecessarily. We have said with regard to the Chevron and Texaco merger that we
expect our integration efforts to be efficient and relatively quick, and we
expect to deliver on that commitment.
Beyond what we learned as a company is the reality that the financial
community's expectations have changed greatly since the time of the Gulf merger.
Many mergers followed that one, and Wall Street now expects synergies from the
merger to be identified and captured very quickly. That calls for a very
efficient integration process.
Q. How come you're calling this a merger? Isn't Chevron actually acquiring
Texaco?
A. This transaction is technically a merger; however, Chevron is paying a
significant premium and will have majority control of the board. We are working
very closely with Texaco and Caltex to jointly design and integrate a new
organization to ensure that together we build the best organization we possibly
can.
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Q. What's the process for completion of the merger? How long will it take? When
will we know the timeline for getting started on integration at my level?
A. The merger requires approvals from stockholders of both companies, pooling
accounting treatment for the merger and regulatory approvals of government
agencies, such as the U.S. Federal Trade Commission. Similar mergers have taken
between six and 12 months to complete.
The merger integration planning process is well under way, and details are being
communicated regularly. Please see go.chevron for updates from John Watson,
Chevron's integration team leader. As the timeline is developed, details will be
announced.
U.S. Downstream
Q. What will happen with our U.S. refineries, service stations, Texaco joint
ventures, assets?
A. Chevron and Texaco anticipate that the U.S. Federal Trade Commission (FTC)
will require certain divestitures in the U.S. downstream in order to address
market concentration issues, and the companies intend to cooperate with the FTC
in this process.
The regulatory process related to the merger is now underway, and it would be
premature and inappropriate to speculate on what the outcome might be.
As for the companies' brands: We have three strong, well recognized brands
around the world -- and we intend to maintain them. We will integrate all three
in an overall branding strategy in an effort to manage them more efficiently and
derive further benefits from our global presence.
Company Strategies, Goals
Q. What happens to The Chevron Way, the "4+1" Strategies and other Chevron goals
and objectives?
A. Our prime objective of being No. 1 in total stockholder return (TSR) is
unchanged, and we will maintain our 4+1 Strategic Priorities of Operational
Excellence, Cost Reduction, Capital Stewardship, Profitable Growth and
Organizational Capability. This merger increases our ability to achieve these
goals. We remain committed to The Chevron Way, and we expect all Chevron
employees to remain focused on the same priorities they were working on before
this transaction was announced. Details about how these fundamental aspects of
working at Chevron will be communicated after the merger is approved and will be
worked out as part of the integration process.
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Credit Cards
Q. What will happen with my Chevron or Texaco credit card? Will I be able to use
it at stations we acquire? Will Chevron accept Texaco credit cards at our
stations? Will we try to communicate directly with Texaco' credit card
customers?
A. Plans for credit card operations will be determined as part of the merger
integration process. As decisions are made, they'll be announced and posted on
go.chevron.
Environment, Health and Safety Policies, Programs, Initiatives
Q. What will the merger's effect be on programs, initiatives and policies
related to environment, health and safety?
A. Chevron remains committed to the same core values it had prior to the merger
announcement, including those reflected in The Chevron Way and in Policy 530,
Protecting People and The Environment. The merger does not change these
commitments in any way.
Sponsorships, Contributions
Q. What will happen to corporate sponsorships?
A. Chevron plans to honor its commitments, and Texaco has said it plans to do
the same. Both companies have a long history of involvement in communities where
they operate. The merger integration process will look the activities of both
companies, and make recommendations for future involvement.
Stock Performance, Wall Street Assessment, Earnings
Q. What effect will the merger have on our stock price, future possible stock
splits, Wall Street's assessment of our company's earnings prospects?
A. Generally, the financial community has reacted very positively to our merger
announcement. Of course, we cannot predict the future. Our focus, however, is to
deliver superior financial performance, and we would hope that our achievements
in that area will continue to be recognized by investors and potential
investors.
Company Name
Q. What will the new company's name be?
A. The merger announcement explained that the new company will be called
ChevronTexaco Corporation.
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Chemicals
Q. What happens to the new chemicals joint venture, Chevron Phillips Chemical
Co.? What will the overall strategy be for petrochemicals?
A. The ongoing integration of the Chevron Phillips chemicals joint venture is
progressing well. We continue to be very excited by the joint venture's
prospects, and we believe that Chevron Phillips Chemical Co. will be able to
deliver more than the committed synergies -- and do it faster. Petrochemicals
will continue to be an important part of ChevronTexaco as a worldwide integrated
energy and chemicals company. We do not expect any strategic changes in the
petrochemical business as a result of this transaction.
Production Quality/Brand Attributes
Q. How will Chevron deal with the fact that the two companies have different
product specifications and levels of quality? Will Chevron continue to uphold
its standards of superior products?
A. Our announcement said that we would create a worldwide downstream business
built around the well-recognized, international brands: Chevron, Texaco and
Caltex. Each of these brands is committed to delivering high-quality products
and services to their customers, and that commitment will continue following
completion of the merger.
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