East West University
Assignment on Financial Analysis for Managers/Financial Management Course Code: EMBA 561/ MBM 507
Subject: British Petroleum Plc (BP) And American Oil Company (AMOCO) merger
Mohammed Sowkat Hossain
Sayed Golam Sorowar
Md. Murad Hossain Sarkar
Submission date: 05.08.2011
British Petroleum Plc (BP) is one of the largest in world, employing 100000 people in over 100 countries, engaged into three segments of business-Oil exploration and production, oil refining & marketing; power & renewable.
American Oil Company AMOCO was the largest natural gas producer in North America with exploration in 20 countries, production in 14 countries.
In 1998, BP and AMOCO announced plans for an $110bn merger that will create Britain’s biggest company.
BP’s earnings in 1997 were $4.6bn and Amoco’s totaled $2.7. Current combined market capitalization of some $ 110bn would take the united group into the world's top trio of oil majors.
The merger was expected to deliver synergies from cost-saving that would add at least $2bn pre-tax a year by end 2000.
The merger will be effected by the issue of new Bp shares, in the form of American depository receipts, in exchange for Amoco common stocks, with Bp shareholders owning 60% and Amoco 40% of the combined group.
Share prices in BP soared after the announcement as the market welcomed news of the deal.
The new group confirmed that it would cut 600 jobs worldwide as a result of the merger. The merger also comes against a backdrop of depressed world oil prices which have fallen to their lowest levels in over a decade.
Analysts said Amoco, the fourth largest US oil producer, were hurt by its lack of international refining and said a deal with oil major was only a question of time. Jeremy Batstone of NatWest stockbrokers said that BP had emerged as the dominant partner.
British Petroleum Plc ( BP ) was founded in1908 with single well in remote area of Persia, after less than half a century, the firm grew to be one of the largest in world, employing 100000 people in over 100 countries
BP’s business was divided into three segments: Oil exploration and production; Oil refining and marketing; power and renewable. In 2007, BP was actively exploring for oil in 26 countries, in 2009, plans to start 24 major projects, planned to reach total reserve of 22.5 barrels. Oil reefing and marketing involved took crude oil to turn into different products like gasoline, kerosene and motor Oil and sold to customer by the distribution channel. The slogan “BP: Beyond Petroleum” had been coined to resent BP as a company that was preparing for a world without petroleum. By 2006, BP claimed to be a world leader in power generation from solar, wind and gas fired power plants
By the end of 20th century American Oil Company AMCO was the largest natural gas producer in North America, with a reach that stretched well beyond its home continent: exploration in 20 countries, production in 14 countries. Amoco produced 13 million tonnes of chemicals a year and was the world’s largest producer of PTA. It was big in solar power, too, with a 50% stake in a leading solar company.
In 1998, Amoco and BP announced that they had merged, combining their worldwide operations into a single organization. Overnight, the new company, BP Amoco, became the largest producer of both oil and natural gas in the US.
At the start of the new millennium, Amoco service stations in the United States were rebranded BP, although Amoco gasoline continued to flow from the pumps.
BP - Amoco merger:
BP and Amoco have agreed to join forces to create one of the strongest and most competitive international energy and petrochemicals groups in the world. British Petroleum and US oil...
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