Acquisitions with no premium

Some months ago, I wrote about a M&A theme of where the “big become bigger”. I also continued to say that “quality will buy quality”.

In Chevron’s case of buying Nobel Energy, I’m not quite sure if they are buying quality, although as the FT article link summarises, at least Chevron didn’t rack up huge debt trying to buy Anadarko last year, while the winning bidder, Occidental, now struggles with that liability.

The other part of my M&A theme musings was also a prediction that forthcoming acquisitions won’t be necessarily require paying a premium and that “take-unders” may be more common that a “take-over”.

Chevron was close in this regard. It is buying Noble’s stock for $10.38 per share, which is only a 7.5% premium to its previous days closing price but quite a discount to its $35 price it was trading at 2 years ago.

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