By Ben Levisohn: Sept 9, 2015
Oppenheimer’s Fadel Gheit and Luis Amadeo contend it’s just a matter of time before ExxonMobil (XOM) goes on a shopping spree–and argue that it’s theoretically possible Chevron (CVX) could be a target.
They explain:
Lower oil and gas prices for longer could accelerate industry consolidation, which could benefit large financially strong companies like ExxonMobil. The current market value of ExxonMobil’s 3.8 billion treasury shares is $278 billion, which is 72% above the market value of Royal Dutch Shell (RDS.A), and almost double the market value of Chevron. Theoretically, if government regulators approve, ExxonMobil can acquire any of its large rivals at a 40% premium. Such a merger could reduce combined CAPEX by more than 20% and operating costs by more than 40% while sharply reducing its net debt ratio. It would also significantly boost shareholder value for both companies.
Shares of ExxonMobil have gained 0.6% to $73.91 at 11:19 a.m. today, while Chevron has ticked up 0.2% to $76.99, and Royal Dutch Shell is up 0.3% at $50.91.
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