Wednesday, October 30, 2013

Exxon Mobil and BP: An Unlikely Acquisition

HRumors have been circulating in financial circles that BP plc. (BP) might be acquired by Exxon Mobil (XOM). Here we look at the possibility of such an acquisition and reasons why Exxon would make a move for the British oil giant.

It goes without saying that BP is past its glory days. The Macondo incident in April 2010, also known as the Gulf of Mexico oil spill, has left BP in a crippling situation. The company has already spent around $50 billion since 2010 on fines, new regulatory requirements and cleaning costs. Its market capitalization has fallen around 30% since the incident, making it the least valuable of the world’s five biggest non-state oil companies. Meanwhile, the market capitalization of Exxon, Chevron (CVX) and Royal Dutch Shell (RDS) has risen by 18%, 38% and 11% respectively since 2010. The rumors are not unwarranted; it might be the perfect time to buy BP, now that its down and out.Read More: BP, XOM

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