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Finance & Accounting
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Table of Contents Table of Contents 2 Exxon Mobile’s acquisition XTO Energy 3 Executive Summary 3 Industry Overview 3 Exxon Mobil & XTO Energy: Company Overview 4 Strategy 5 Valuation and Deal Design 8 Financing 9 Regulatory Implications 9 Defence Tactics & Deal Protection Measures 10 Implementation 10 Risks 11 Bibliography 12 Exxon Mobile’s acquisition XTO Energy Executive Summary The up and down swings in the M&A activity in the Oil and gas industry is as volatile as the prices of the commodities.


Industry Overview The discovery of Oil is considered to revolutionize the way world has been working. With an inelastic demand of energy, it is no surprise that the market structure of Oil & Gas industry is Oligopolistic. Unlike other industries, the supply of oil & gas depends on a number of factors such as geopolitical tensions, natural calamities, and clamor for energy security by nations, global oil demand and trading speculations. Considering the unusual demand-supply dynamics of this industry, the landscape of M&A activity is driven by the economics of oil, development-driven increase in demand of energy and a race to secure energy stock and reserves for the future. Bloomberg estimates that 27% of the total M&A deals in the year 2011 would be attributed to the energy sector (Bloomberg, 2010). With the advent of financial crisis in 2007-08, the M&A activities in this sector was incentivized in three cases: 1) major oil companies pursuing growth options 2) independents divesting assets in order to focus capital spending on core assets; and 3) companies combining for survival (Booz and Co., 2009). ...
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