Mergers and Acquisition: Exxon Mobil Merger

Introduction
Industry mergers or business combinations are a phenomenon that has been commonplace for quite some time now. They basically involve two or more organizations coming together to form a large corporate under which they operate. The new organization which may have a combination of the names of the merging components or a totally new name operates as a new entity. The new rule under which the new entity operates depends in the agreement on the terms of the merger. As stated in our advanced accounting text, the history of mergers can be traced back to the 1895 to 1905 period in the US when the …show more content…
This was a 26.4% premium over the $58.7 billion Mobil market/ fair value. (http://www.anderson.ucla.edu). Therefore premerger, the equity value of Exxon shares represented 75% of the combined market value. However, the premium paid to Mobil caused the post-merger proportion of ownership to drop to about 70% for Exxon and rise to 30% for Mobil. (http://www.anderson.ucla.edu). Based on the terms of agreement stated above, Exxon Mobil combination can be categorized as consolidation, which applies when two or more previously separate firms merge into one new, continuing Company. The new Company Exxon Mobil Corp posted a profit of $ 9.8 billion in 1999 up from a joint $ 5.5 billion the year before, when the two firms were still separate entities (Slocum, 2009, p 8). Following the merger, Exxon Mobil did not only become the largest company in the world, it reunited its 19th century former selves, John D. Rockefeller’s Standard Oil Company of New Jersey (Exxon) and Standard Oil Company of New York (Mobil). And as Slocum T. puts it, “The merger was so big, in fact, that the FTC required a massive restructuring of many of Exxon & Mobil’s gas stations, in order to avoid outright monopolization (despite the FTC’s 4-0 approval of the merger)”. (Slocum T., 2009). And today, ExxonMobil remains the strongest leader in the oil market, with a huge hold on the international market and dramatic earnings. In 2008, ExxonMobil occupied all ten