The decade's worst stocks
Article Abstract:
Exxon and Mobil plan a merger which will create the largest petroleum company world wide, and this move reflects pressures on the industry. Petroleum prices have dropped and an early rise in prices is not expected. Costs have been reduced to the extent that there are few savings left to be made. Stocks in petroleum companies have tended to perform poorly and returns on capital have been less than capital costs, so stockholder value has been destroyed. Expansion outside mature markets involves risks which bigger companies may be better equipped to take on.
Publication Name: The Economist (UK)
Subject: Business, international
ISSN: 0013-0613
Year: 1998
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The trouble with mergers, contd
Article Abstract:
There are risks involved in generalising about mergers, since some, such as Siebe's acquisition of BTR, offer cost savings, though the rationale for others is less clear. Stockholders of companies doing the acquiring tend not to benefit as much as stockholders of companies that have been acquired. Companies that have recently merged tend not to perform well, and this is especially true for mergers at the peak of a bull market. The motivation may be imitation, or a defensive fear. Mergers may be productive, but promised benefits may not materialise.
Publication Name: The Economist (UK)
Subject: Business, international
ISSN: 0013-0613
Year: 1998
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