The Exxon - Mobil Merger Controversy*

            


Details

Case Code : CLBS032
Publication date : 2004
Subject : Business Strategy
Industry : Oil
Length : 04 Pages
Price : Rs. 50

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Key words:

Mergers, acquisitions, competitive advantage, technological advantage, joint ventures


* This caselet is intended for use only in class discussions.
** More comprehensive case studies are priced at Rs.200 to Rs.700 (US $5 to US $16) per copy.

 


Abstract: ICMR India ICMR India ICMR India ICMR India RSS Feed

The caselet discusses the merger of Exxon and Mobil Corporation, the two top leading companies in the US oil industry. It details the factors that led to the decision of the two companies to merge and the synergies reaped after the merger.

Issues:

 » Reasons behind the success of the merged entity
 » Various challenges for Exxon-Mobil in the future

Introduction

In the mid-to-late 1980s, the number of places in the world where one had opportunities for exploration and productions were limited. In the late 1990s, there were more opportunities so far as oil production and exploration of oil was concerned. Many countries were opening up, such as China, Venezuela, and countries in the Middle East. These were the sort of large-scale, capital-intensive opportunities that the merger entity would capitalize on.


This is one of the reasons why Exxon and Mobil had merged to increase the scope of opportunities. By the late 1990s, the merger mania seemed to have been over amongst the major oil producers. The mergers and acquisitions in the late 1990s, resulted in many new organizations, like TotalFinaElf, Exxon-Mobil and BP Amoco Arco, to be called BP.

These mergers had changed the rankings of the oil companies involved in petrochemicals. TotalFinaElf had overtaken both Exxon Mobil and Royal Dutch Shell to take the top spot.....

Questions for Discussion:

1. The Exxon-Mobil merger was one of the biggest industrial mergers ever. Do you see any synergy in this merger?

2. An analyst commenting on the Exxon-Mobil merger said, “While most mergers go wrong, this deal struck gold..…black gold.” What were the reasons behind Exxon-Mobil’s success as a merged entity?