Tuesday, September 7, 2010

Citigroup (NYSE:C): Exxon (NYSE:XOM) Ready to Bid on BP (NYSE:BP)?

Citigroup (NYSE:C) recently talked about the need for BP (NYSE:BP) to conclude its permanent sealing of the Macondo well before companies may be interested in making a bid on them, and now that they're close to doing that, one of the obvious names associated with the possibility is ExxonMobil (NYSE:XOM).

One other possibility related to a possible acquisition that has been thrown around, as far as oil companies go, is Chevron (NYSE:CVX), but if they made a bid, and Exxon was interested, they would have no chance if a bidding war ensued, as Exxon has almost exactly twice the market cap of Chevron, and could easily win a battle.

Another possibility is a Chinese company. Cash wouldn't be a problem there, but being government-owned, for the most part, it's highly unlikely the go ahead would be given if a bid was made.

There hasn't been specific indication from a competitive or antitrust standpoint whether or not there would be resistance to an Exxon bid, but if they did get BP, the size of the company would be extraordinary.

Once Exxon would take the BP assets and grow them, they could have a market cap of about $500 billion. As it is, they be well over $400 billion. And that's at a time they've been beaten down in share price because of the ongoing recession.

It would boggle the mind as to the powerhouse they would become, although it would come with a lot of baggage in BP, which they would have to deal with over a long period of time.

But with BP's shares down and their divesting of assets, there may not be a better season of time to get them at a bargain price.

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