Strategy of M&A deals in oil industry (on example of «Rosneft» and «Bashneft» deal)
https://doi.org/10.17073/2072-1633-2020-2-137-148
Abstract
I analyzed merges and acquisitions’ transactions and their influence on strategy and development of oil company. For analyses the deal I chose acquisition by Rosneft of Bashneft, which took place in October 2016, applying both traditional and real option models. Real option model is more difficult, but better methodology, because it allows to valuate different scenarios of acquisition, choose more optimal scheme (acquisition time, amount of acquired shares). After building decision tree I calculated NPV of cash flows, which are generated in the deal (in scenarios of high and low oil prices, high and low synergy effects in two periods 2017–2018 and 2019–2020).
The main results are the following. Acquisition deals create value for shareholders, only if acquisitions correspond to strategy of bidder company and culture of target company. Under some hypotheses the acquisition of Bashneft creates additional value for Rosneft in most scenarios (except scenario with low oil price and low synergy). Postponing the decision about complete acquisition till 2019 increases probability of successful acquisition as well as maximizes NPV.
About the Author
K. L. Astapov
Lomonosov Moscow State University
Russian Federation
Russian Federation
Kirill L. Astapov – Dr. Sci. (Econ.), Professor of Economic and Financial Strategy Department, Centre of Strategic Research, Moscow School of Economics
1-61 Leninskie Gory, Moscow 119991
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Review
For citations:
Astapov K.L. Strategy of M&A deals in oil industry (on example of «Rosneft» and «Bashneft» deal). Russian Journal of Industrial Economics. 2020;13(2):137-148. https://doi.org/10.17073/2072-1633-2020-2-137-148
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