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Essay / Research Paper Abstract
This 8 page paper looks at the merger between Mobil and Exxon in 1999. The paper is written in two parts, the first part identifies some of the strategic issues which may have influenced the merger decision. The second part consider the way in which the merger could create value for the shareholders. The bibliography cites 10 sources.
Page Count:
8 pages (~225 words per page)
File: TS65_TEexxonmo.doc
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Unformatted sample text from the term paper:
deal worth roughly $81 million (Morrison, 2000, p12; CNN, 1999). When looking at this merger of two giants it may be argued that the move could be seen as strategically
advantageous given the conditions at the time, and that the merger had the potential to create a great deal of value for the shareholders. These two elements are inherently linked,
strategic moves that help to secure and promote the future of a firm can create short and long-term value for shareholders. Likewise, the creation of value, for example cost savings,
can be seen as a valid strategic target in motivations for acquisitions and mergers (Mintzberg et al, 2008, p225). Strategic Issues When looking at the merger from a
strategic perspective there are a number of considerations that would have impacted on the announcement of the intended merger which was made in 1998. During the late 1990s there were
a number of pressures on the petroleum and chemical businesses, including low oil prices (Nakamura, 1999, p17). When oil prices are low this is usually good for refiners, however the
prices on an ongoing basis can have a more negative impact on the entire business, and during the late 1990s there was an oversupply situation as a result in the
economic decline seen in the Asia-Pacific region (Nakamura, 1999, p17). This was placing pressures on refineries, especially in Europe and Asia, which were significantly reducing their production levels (Nakamura, 1999,
p17). In 1999 it was expected that some European refineries would have to do close down, unless there was a significant shift in demand displaying increased level of gasoline consumption
(Nakamura, 1999, p17). However, it is notable that the companies denied low oil prices was the cause (de Rouffdignac, 1998, p1). The difficult conditions within the industry had led
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