Pennzoil Spinoff to Merge With Quaker State

Pennzoil Co. said it will split off its motor oil business and Jiffy Lube chain of oil change centers into a new company that will merge with Quaker State Corp. The merger would create a company with annual sales of $3 billion and bring together two of the most popular brands of motor oil. It also would combine Jiffy Lube, the world’s largest franchiser of fast oil change centers, with one of its biggest competitors in Quaker State’s Q-Lube. Houston-based Pennzoil would spin off its motor oil, refined products and franchise operations into a separate, publicly traded company, which would then merge with Irving, Texas-based Quaker State. The move comes five months after Pennzoil fended off a hostile $4.2-billion takeover bid from Union Pacific Resources Group Inc. after repeatedly calling the offer inadequate. Quaker State has annual sales of $1.2 billion. Pennzoil shares rose $3 to close at $69.81, and Quaker State fell $3.69 to $19.81. Both trade on the NYSE.