The

Federal Trade Commission

said Thursday it had unanimously approved

BP Amoco's

(BPA)

acquisition of

Atlantic Richfield

(ARC) - Get Report

or Arco for $27 billion, after BP Amoco agreed to divest itself of Arco's Alaska assets.

"The commission has approved the merger of BP Amoco and Arco by a vote of five to one," an FTC spokesman said.

The approval will pave the way for BP Amoco to merge with Arco, creating the world's third-biggest oil company.

Exxon Mobil

(XOM) - Get Report

is the largest followed by

Royal Dutch/Shell

.

The FTC's decision comes after months of delays and uncertainty. In February, the FTC began a federal suit to halt BP Amoco's acquisition of Los Angeles, Calif.-based Arco. The suit was commenced because of regulatory concerns that a merged company would be the dominant player in the North Slope region of Alaska, controlling 70% of Alaska's oil production.

But in March, the FTC decided to delay seeking an injunction to stop the deal in order to give BP Amoco a chance to reach an agreement to sell the North Slope assets. Since then, BP Amoco has sold Arco's Alaskan oil fields to

Phillips Petroleum

(P)

for up to $7 billion in cash.

The FTC said Alaska, California, Oregon and Washington had also requested to adjourn the proceedings against BP Amoco.

Arco's stock slipped 5/16, or 0.4%, to 84 in late trading Thursday. BP Amoco's shares dropped 13/16, or 1.6%, to 51 5/16. (Arco closed down 3/4, or 0.90%, at 83 7/16. and BP Amoco finished down 5/8, or 1.2%, at 51 1/2.)