BP Seen takeover target after settlement as value trails Essay

BP Seen takeover target after settlement as value trails - Essay ExampleThe communitys reserves are worth $ 7 a barrel while its rival Shell is worth $14. The troupes market value is the least(prenominal) compared with the other big four companies. The 50% sold accounted for about two threesome of the familiaritys oil production. The assets were in exchange of $12.3 billion funds and 12% stock in Rosneft, a Russian oil corporate. Rosneft is expected to also acquire the remaining 50% stock to assume full ownership. agree to the London Business School, the selling of its assets, as well as, expensive settlements for suits related to the oils beetle off damages is equivalent to a takeover. The play, as well as, the oil spill tragedy, makes PB weak and its competitors including Royal Dutch Shell may bid for more stake. According the companys Chief Executive, in an interview, the reduced companys size may lead to a takeover attempt. The Chief Executive also unveiled the companys e xpected short-term and long-term plans meant to spur growth. The plans include raising new projects margins and issuing back shareholders funds. The shareholders have also been rewarded by a 12.5 % increase in dividends paid in the 2012 third quarter. Additionally, due to the importance of the company to the United Kingdom, the government may oppose any move meant to bring a merge or acquisition. The company is integrity of the UK economy backbone employs a large proportion of the countrys population and earns the government huge revenues in terms of taxes. Among the companys plans, there is a defense strategy fol economic crisising speculations that the company may be taken over. Many investors are participationed in the companys shares because of their low value. A takeover would be of benefit to the shareholders who would be able to recover some of their invested money. The company has liquidity problems, and the only option left of fighting for its endurance in the market i s through a takeover or selling of some of its assets. However, selling some of the assets is may be a dangerous move as it may result to bankruptcy of the firm thus requiring it to dissolve. Additionally, it may be difficult to raise capital through debt securities, for example, bonds because of the risk associated with the company. The rate of interest would be significantly high since the financial institution would consider the risk. It would be of benefit to the new owner because of the valuable assets and human capital that the oil company holds. Since it would be an entirely different company, no new suits would be expected and, therefore, the new owner will easily turn the nearly collapsing company into a global profitable company. If the new trader would then stop the BPs shares trading, immediately after the purchase, the market price would go up. Finn states that the value of the stock would go up because of decrease in demand (131). Additionally, if the new owner would b e another oil company, the benefits would be even more. The market share and dominance would go up. This in turn, would increase the companys profitability and market value. A merger would also be of benefit to the current shareholders. Their stock in the company has declined significantly since the oil spill disaster. In addition, they have not been getting the returns that made them invest in the company. A merger will inject