Exxon Mobile Merger

This solutions manual provides the answers to all the review questions and end-of-chapter problems in Financial Management: Principles and Practice, by Timothy Gallagher. The answers and the steps taken to obtain the answers are shown. Readers are reminded that in finance there is often more than one answer to a question or to a problem, depending on one‘s viewpoint and assumptions. One answer is

Oil suppliers dig deep down to the roots to analyze and derive concrete solutions to carry on the rising market. The force of fracking in the United States is lifting the economy; the system has been a political game changer for the nation, creating job opportunities and investing money into the community. The United States is currently capable of competing with the global marketplaces at a high rate. This coordination leads to knowledge for on-shoring manufacturing, which eliminates the dependency on foreign oil. This significant groundwork is driving opportunities for innovators. The abundant supply of oil and the inexpensive cost leads to cheaper energy for consumers (Dews, 2015). Along with the low price for refineries,

     Chevron Texaco, or Texaco Shell, is the leading competitor to ExxonMobil. Texaco is in the same areas of business as Exxon. Their petroleum products and lubricants are sold in the same markets, stores, and in many cases opposite street corners from each other. The two companies are very similar, but Exxon’s recent petroleum deals in the Middle East and Africa have allowed its stock price to jump ahead for the time being (1). In the industry, the two companies mainly compete for the ability to negotiate for new production. The competition is not made at the pump or at the local auto store. It seems that it’s more important to control oil than it is to sell it quickly. Because oil has so much value and power in the world, the industry is made of semi-friendly companies. Surviving and making as much profit as possible, is more important than trying to put people out of business.

The Sherman Antitrust Act broke apart Standard oil into several pieces in 1911, and one of these pieces, named Standard Oil Co. of California, would later become Chevron. It was a part of the “Seven Sisters”, which dominated the oil industry on a global level in the early 20th century. Standard oil of California could only use the name when it was in California, and so it adopted the name Chevron. In 1933, Saudi Arabia Granted the company a concession to find oil, which led to the discovery of oil in Saudi Arabia, and the world’s largest oil field.

The industry is highly competitive and typically have thin profit margin and is very sensitive to volatility of crude oil price and general economy condition in terms of revenue and profitability. As the crude oil price is projected to increase in the next five years, this could potentially have positive impact on company revenue, yet due to the lag between the movement of crude oil price and that of the gasoline, as well as the ability of the company to

This document is authorized for use only by Yen Ting Chen in FInancial Markets and Institutions taught by Nawal Ahmed Boston University from September 2014 to December 2014.

(Ironically, the Exxon Mobil merger reassembled the legendary Standard Oil, John Rockefeller’s company. In 1911, antitrust authorities forced Standard Oil to break into two companies: Standard Oil of New Jersey, which later became Exxon, and Standard Oil of New York, which later became Mobil.) Nonetheless, the two companies had very different images in the oil industry. Mobil was seen as having a “combative feistiness,” whereas Exxon had a “relentlessly efficient stuffiness.”5 Because of the size of the companies, the merger was scrutinized by antitrust regulators and, in order to complete the merger, both companies had to get rid of certain operations, including almost 2,500 service stations in the United States and Europe. By the mere fact that a growing population of environmentally concerned people worldwide was skeptical of large oil companies and their promotion of fossil fuel use, both Exxon and Mobil struggled with their public image. Exxon had the most damage to contain, however, because of the 1989 Exxon Valdez oil spill in Alaska’s Prince William Sound, when the single-hulled oil tanker, while dodging icebergs, hit a reef outside the shipping lane. The

A meeting of Shareholders is scheduled for Saturday, February 23, 2013. Enclosed is a copy of our proxy statement.

Purpose: This paper analyzes mergers and acquisitions (M&A) focusing on the U.S. pharmaceutical industry in the period 1981-2004. This industry is chosen because it is global, engages intensively in M&A which it uses to both complement and substitute for early stage research, and because the potential abnormal returns to blockbuster drugs are substantial. It is our assumption that if abnormal returns to M&A exist in the short and long run, this is the industry to find them.

In our analysis we used a short-horizon model, meaning that we chose a window of 4 months before the merger was announced and 4 months after the actual merger was completed, and studied the security prices of the merging companies and their rivals over that time period. We then decided to use a 3 day event window, CAR [-1,1] first used by Andrade, Mitchell and Stafford (2001), in which the event occurred on the 2nd day within that time frame. To do this, we used a market model to derive the relationship between the stock price of the firms and our chosen index, the Standard and Poors 500. At this point we also examined changes in the R&D intensity between companies that received a second request and or complaint, and those that did not over the following 4 month period.

This research focuses on finding a variety of sources in books, magazines and Internets on the effect of the oil industry on world trade. Its purpose is for finding and analysis the source, which is related to the following issues through Robert Harris?s theory (2007) and CARS theory.

Brigham, Eugene F., and Joel F. Houston. Fundamentals of Financial Management. Thomson: South-Western Publishers, Eleventh Ed. 2007.

Oil is vital to many industries, and is essential for the maintenance of industrial civilization in its current configuration, and thus, a serious problem for many countries. Oil accounts for a large percentage of the world 's energy consumption, ranging from a low of 32% for Europe and Asia, with a maximum 53% for the Middle East.

Energy makes the wheels of global supply chains go round (Bud La Londe, 2006). A typical oil supply chain begins with the crude oil producer, next, the oil moves to the refiner, the transporter, the retailer and finally to the gas pump where a customer receives the product. The top world oil producers are Saudi Arabia, Russia, the United States, Iran, Mexico, China, Canada, United Arab Emirates, Venezuela, Norway,

Oil and Gas sector is one of the most important sectors and the backbone of all the economic activities across the world. All other sectors are dependent on the growth and activities in this sector. If there is any disruption in this sector, it can cause severe economic crises across the world economy. In this report, I have tried to discuss the four major challenges that are faced to this sector, provide a summary of these issues and then link their impact on the economy of projects. I have also discussed the effect of these factors of the economy, society and recovery of projects. At the end, I will give possible ways to mitigate the potential negative effects. I will also relate this topic to the economy across the world. The country’s economy depends upon the petroleum and gas industry. If there is any change in the petroleum industry, a significant change can be seen in the country’s economy.