Statoil and Norsk Hydro Form the 3rd Intra-Watch List Merger
Oops - we did it again! For the third time in less than six months two companies on our Watch List announced a merger.
UPDATE 6-Statoil to buy Norsk Hydro’s oil, gas business | Reuters.com
Norway’s Statoil (STO) has agreed to buy the oil and gas activities of Norsk Hydro (NHY) for about $30 billion to form a national champion with its sights set beyond the dwindling oilfields of the North Sea.The all-stock deal will create the world’s largest offshore operator, the companies said.
“The recommended merger is driven by an ambition to grow in Norway and internationally,” Norway’s two biggest companies said in a joint statement, adding that the new group’s output would be 1.9 million barrels per day in 2007, with proven oil and gas reserves of 6.3 billion barrels of oil equivalents.
The market seems to like the deal. While Statoil has shed $1 billion in market value on the news due to the premium it is paying, Norsk Hydro is up nearly $7 billion. That is an enormous $6 billion net gain, or about 6% of the combined companies’ pre-merger market capitalization.
At least from the aggregate investor’s standpoint, this deal makes much more sense than one like, oh, LSI/Agere.
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