Exxon Mobil case (assignment should be a total of 4 pages double spaced with priority given to the first and second question)
For this case, a critical analysis is required with regard to the deal on beforehand and the evaluation afterwards. Please discuss the following:
1. Forecast: (1) reasons for the merger, (2) financial execution (share deal, exchange terms), (3) valuations and assumptions (synergies, growth, wacc)
2. Hindsight: (1) industry developments (impact of oil price fluctuations), (2) execution (successful merger?), (3) valueline and corporate website of XOM (today’s financial situation in comparison to peers such as Royal Dutch).
3. Is the “premium over market” of Mobil (26,4%) high?
4. Is it possible to have (for Mobil) cost of equity lower (than for Exxon) and cost of debt of Mobil higher than of Exxon?
5. Is the terminal value correctly calculated? (eg discounted for 11 and not for 12 years?)
6. Which number of shares are used to calculate the share price after the merge?
7. What is the difference in approach between the DCF Formula Valuation and DCF Spreadsheet Valuation?
8. Explain the negative and positive elasticity’s for the different changes. Is this sensitivity analysis useful?