Question

In business terms, what are your thoughts on ExxonMobil undergoing a merger, acquisition, or being acquired?

Answer 1

Technically, a merger is when two companies decide to combine forces by merging two separate entities into one new joint organisation made up of both businesses. A merger is usually pursued when two companies of a similar size and stature join forces, with both companies being broadly treated as equals.Most deals that are referred to as ‘M&A’ are, in fact, acquisitions. This is when one company buys another, with the target company being absorbed into the bidding company. Technically, the target company that is being acquired – and therefore its shares - cease to exist when the deal is completed while the buyer’s shares continue to trade as normal.

Business Mergers can be either successful or a total failure. Just because a the merger cost a lot of money doesn’t mean that it will be a successful deal. One of the most successful mergers was the merger of Exxon Corporation and Mobil Corporation, the merger between two of Standard Oil’s offsprings. This merger is considered today one the the greatest business mergers of all-time according to many business websites.
The deal between Exxon Corporation and Mobil Corporation was completed on November 30, 1998 and at the time according to CNN Money, was a historic $80 Billion deal (Exxon). In a CNN Money article called “Exxon, Mobil in $80B deal” it states: “Under terms of the deal, the merged company will be called Exxon Mobil Corp., retaining both the Exxon and Mobil brands. The company will be headquartered in Exxon’s home city of Irving, Texas” (Exxon). This deal created one the largest oil manufactures in the world and had enough oil and gas reserves on hand that only two countries had more, Saudi Arabia and Iran. The deal was done to reduce cost for both companies and was done to offset low oil prices in the market.

the merger “A combined 1997 profit of $11.8 billion on $203.1 billion in revenue, with the companies together employing about 122,700 people, branding more than 48,000 service stations and possessing energy reserves larger than Canada’s” (Corcoran). At the time Exxon Corp. and Mobil Corp were the largest and second largest oil producers and at the time would turn into the third largest company. This would be like Comcast and Walt Disney Company was to merger together, the worlds first and second largest television companies.

This was a successful merger as we can see, with Exxon-Mobil being the largest company in the world sales of $433.5 Billion and a market value of $407.8 Billion.

This is a staggering number considering today that Exxon-Mobil is the fourth largest oil producer in the world behind Saudi Arabia, Russia, and Iran (Helman).

There many disbelievers in the merger and also many conspiracy theorist came up with some ideas of why this merger was approved by the FTC. A lot of people believed that the FTC by approving the merger that they were giving the go ahead to unfair competition and also saying that the dismantle of Standard Oil in 1911 wasn’t important anymore.

The merger of Exxon Corp. and Mobil Corp.was a once in a lifetime merger that caused a lot of good that many people in the U.S. With Exxon-Mobil and other large U.S. oil producers like Chevron and ConocoPhillips creating machines to extract oil.