BP Merger Prospects-Less than 10%
June 30th, 2010
I doubt the merger talk making today’s news will lead to a buyout of BP.
There is just too much unpredictable risk involved and the size of any buyout too large ($100 billion+), to say nothing of probable earnings and cash flow dilution, for such a deal to have merit.
As for Exxon, the name most prominently mentioned, I would be shocked if they accepted the risk a buyout of BP would entail, especially given a glut of oil going into a period of a worldwide economy showing clear signs of fragility.
While we have written we expect BP to engage in at least $10 billion in asset sales, which should be part of a program to bring the cost of capital down, and which should aid the stock price,a full out buyout is quite unlikely.
Categories: General
