A Merger is a financial strategy where one company acquires another. Statoil Hydro of Sweden acquired one third of Norsk Hydro company’s shares. This was finalized on the third quarter of 2007 in Sweden between these two Swedish companies. The merger was done in order to synergize the assets of both companies. The tension occurs because the rivals in the oil and gas industry would be displaced by the bigger and better synergized mergers. The merger would catapult the new company from its current third place to be no.
one position in the offshore oil and gas reserve industry. BODY The Merger Details The merger was consummated synergize both companies. Statoil Hydro of Norway had entered into an agreement to acquire a large chunk of the operations of its main rival in the oil and gas reserves industry, Norsk Hydro. This would increase the oil and gas operations assets of Statoil Hydro in exchange for $28,000,0000,000 paid to Norsk Hydro(Timmons, 1). The deal was finalized on the third quarter of 2007.
This had to be approved by the shareholders of both companies as well as the concerned government regulatory agencies. The deal stated that the Norsk Hydro’s shareholders will reduce its 100 percent shareholdings to a lower 32. 7 percent in the new company. The deal was worth one hundred eighty five billion kroners based on the stock market prices. Statoil and Norsk Hydro had ORIGINALLY planned to merge their offshore operations which would entail 15,000,000 pounds("Offshore Fuel Firms in Pounds 15bn Merger.
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",25). Effect of the Merger on the industry (Macro) The merger was planned in line with the industry trend of nationalizing the oil and gas reserves industry. The current situation in the oil and gas reserve industry is characterized by a tight elbow room where new entrants have to squeeze their way into in terms of taking over new oil and gas reserve oil fields. One way to break into this saturated market would be to improvise or inject a uniquely better technology into the industry.
Norsk Hydro’s chief executive, Eivind Reiten, before the takeover will the chairman of the new company. Norsk Hydro would supply the oil and gas reserves gap precipitated by the Russian oil and gas reserve company Gasprom’s stopping its exports to Ukraine due to some price misunderstandings. The board of directors of the new company would comprise three members from Norsk Hydro and four members from Statoil Hydro. The current industry trend in the European Union skyline is to consolidate small oil and gas reserves companies.
This trend was influenced by the European Union’s liberalization of assets policy slated in 2008 In addition, the oil and gas reserves industry saw Russia is proudly large. Russia plalces second in the gas and oil production race by improving the output of its Shtokman gas field. This Russian oil and gas reserve company had cut its ties with other rivals in the industry like Norsk Hydro, Statoil and other rival Northern Hemisphere companies.
Synergy is the merger of two or more companies in the oil and gas reserve environment where one plus one is equal to more than two. The current Statoil production is small. Its production of over six million barrels of oil and gas reserves is only a small trickle when compared with the oil and gas reserve output of the Russian oil company, Gasprom. Norsk Hydro will still retain around thirty percent of its former self whereas Statoil will take the remaining 67. 3 percent of Norsk Hydro(Timmons, 1).
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