1. Pennzoil Fluid Application Guide

Learn about Pennzoil's line of automatic transmission fluids and gear oils, formulated with high-quality mineral oils for optimal performance.

Pennzoil and Quaker State, striving to endow motor oil with the clean cachet of toothpaste and detergent, announced plans today to combine into a new, dominant force in the sale and manufacture of automotive lubricants, waxes and additives. The companies, already first and second in the nation's motor oil market, would together have a 36 percent share. In their two-stage plan, Pennzoil would spin its motor oil operations, Jiffy-Lube chain and related businesses into a new public company, yet unnamed.

That company would then merge with the Quaker State Corporation in a stock swap, but their brand names would remain distinct. The company formed by the merger would have sales of more than $3 billion and a likely market value of at least $1.5 billion. 'It's going to be to car owners what Procter & Gamble is to households,' said James L. Pate, Pennzoil's chief executive.

Pennzoil Fluid Application Guide

Pennzoil itself would remain an independent petroleum exploration and production company. For Pennzoil, the deal could help compensate shareholders dismayed by its rejection last year of a hostile, $4.2 billion takeover bid from Union Pacific Resources.

Pennzoil shares gained $3, or 4.5 percent, to $69.8125. Quaker State, however, fell $3.6875, or 16 percent, to $19.8125. After having risen sharply for several weeks on rumors of its possible sale. The deal was praised by one of Pennzoil's most critical investors, Guy Wyser-Pratte, a New York money manager who successfully pressured the company to lower its takeover defenses earlier this month. Said: 'Right as they turned down a big fat offer from Union Pacific Resources, they went and did something else.' ' They're to be commended.

A lot of other companies just let shareholders croak.' ' Pennzoil and Quaker State executives have been disappointed by investors' refusal to award their companies the lofty stock prices and earnings ratios accorded the makers of sweeter-smelling consumer products. Both companies are diversifying beyond motor oils, where Pennzoil has 21.5 percent of the market to Quaker State's 14.5 percent. Though these lubricants will account for about two-thirds of the new company's sales, it will also have brands including Blue Coral and Classic car waxes, Slick 50 and Gumout fuel additives and the Fix-a-Flat tire inflater. Like Pennzoil, the new company will be based in Houston, with Mr.

Pate as its chairman and chief executive, and Mr. Baum as vice chairman. Baum, a former Campbell Soup executive hired to shake up the company in 1993, moved it from Oil City, Pa., to the Dallas suburbs two years later. The companies said they envisioned no objections from Federal antitrust authorities, who had no comment today.

In such cases, however, regulators consider not only national but also local market share, which, for these companies, is significantly higher in some cities. For each share they hold, Pennzoil investors would also receive a share in the new company, while Quaker State investors would receive.82 share in the new company for every share they hold.