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RUNNING HEAD: Mergers. 1 MERGERS. Student Name Course/Number Due Date Instructor Name
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Mergers. 2 MERGER, ACQUISITION AND INTERNATIONAL STRATEGIES Task Choose two public corporations in an industry with which you are familiar with; -one that has acquired another company and operates internationally and - one that does not have a history of mergers/acquisitions and solely operates within the U.S. Question 1 ExxonMobil Oil Company Limited In the year 1999, two oil companies namely Exxon Oil Company Limited and Mobil Oil Company Limited previously known as Socony-Vacuum Oil Company merged to form a parent company called ExxonMobil Oil Company Limited. During that period, the marginal returns from U.S oil industry exploration and development activities were negative (Digman, 1997). This was mainly as a result of oil price instability. Yearly, oil prices declined from $14.71 in 1949 to $10.66 in 1972 and by early 1986, oil prices had dropped to $10 per barrel, a decline of 68.5%. This was sufficient enough to suggest that no oil company of any significant size was immune to a takeover threat during the early 1980's. Henceforth, the major oil companies opted to engage in a wide range of restructuring activities. These changes in the organizational structure and systems sought to increase efficiency, flexibility and responsiveness to change (D'Aveni, 2004). A reduction in capacity and employment was experienced. Between 1980 and 1992, employment at eight major oil companies was reduced from 800,000 to 300,000 a reduction of 62.5%.Headquarter's staff was reduced from 3,000 to 800 in six major oil companies between 1988 and 1992.
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Mergers. 3 On November 30, 1999, Exxon and Mobil hence joined to form ExxonMobil Corporation with the aim of enhancing their stability globally. Exxon had a market value, premerger of $175 billion while Mobil had $58.7 billion thus representing an ownership percentage of about 70% for Exxon and 30% for Mobil. The merger turned out to be a wise choice for various reasons; 1. By combining complementary assets, ExxonMobil gained a stronger presence internationally with the highest potential for the future oil and gas discoveries. 2. It is now in a stronger position to invest in programs involving outlays with high prospective risks and returns (Weston, Siu & Johnson, 2001). 3. Both companies unification created wider areas of exploration opportunities as Exxon had strongholds in deep waters in West Africa, Azerbaijan while Mobil had experience in Nigeria, Equatorial Guinea, and Turkmenistan.
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  • Spring '18
  • Socony-Vacuum Oil Company

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