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roachboy · 06-03-2010, 09:34 AM

the captains of industry and finance are perhaps considering and not considering bp:

Quote:

Talk of takeover swirls around BP

By Lina Saigol and Miles Johnson in London and Ed Crooks in Houston

Published: June 2 2010 23:49 | Last updated: June 2 2010 23:49

When a whale is wounded, it does not take long for the sharks to circle. With BP floundering in the Gulf of Mexico, the market has been abuzz with talk of a takeover of the British oil major.

The substantial erosion of BP’s market value – its shares have fallen 34 per cent since the Deepwater Horizon rig exploded on April 20 – means the company looks affordable to rivals for the first time in decades.

BP’s market value, which surpassed Royal Dutch Shell at the start of the year, has fallen to $115bn, lower than ExxonMobil at $280bn, PetroChina at $278bn and Shell at $159bn.

Technically, any of these companies could afford to buy BP, but few would know what they were buying in an industry already fraught with regulatory and political risk.

The huge and indeterminate costs for clean-up, damages, fines and compensation – analysts’ forecasts of the cash cost to BP have so far typically ranged up to about $20bn – could spiral into tens of billions of dollars.

This means that few, if any, investment bankers are rushing to pitch the idea of buying BP to their clients.

bp-thumb.jpgOne banker likened the situation to Lloyds Banking Group’s takeover of HBOS two years ago.

The UK bank had always coveted HBOS, so when the global financial crisis struck it snapped up its smaller rival, only to find itself exposed to billions of dollars in risky loans and investments.

In spite of that, traders believe BP’s fall in market value presents Shell with a once-in-a-lifetime opportunity.

Earlier this year, Lord Browne, BP’s former chief executive, revealed in his memoirs that he tried in 2004 to merge his company with Shell.

But while that deal may have made some sense six years ago, bankers say it would not do so today. No matter how compelling a price BP may be now, it is not a strategic must-have for Shell.

“Becoming bigger would not solve the problem of resource access,” one oil M&A banker said. “Oil mega-mergers used to be about extracting costs and building synergies through scale, but today they are about growth,” the banker added.

The regulatory complexity along with competition issues posed by a mega-merger would make a deal for a company with large operations in the US and western Europe particularly difficult – particularly for downstream fuel distribution and marketing businesses.

A merger between ExxonMobil and BP, for example, would see the combination of the first and second-biggest gas producers in the US – an outcome unlikely to be palatable to regulators, even under normal circumstances.

Disposals could probably assuage the authorities’ concerns, but those forced sales would also destroy value.

However, with the Obama administration’s current hostility towards the industry, the prospect of Big Oil getting even bigger is unlikely to be well-received.

Some industry observers say BP could follow the example of some troubled financial institutions and split itself in two, creating a “bad BP” to carry all the liabilities and allowing a “good BP” to go on with its business, but this would similarly face huge political opposition in the US.

The suggestion from Robert Reich, labour secretary under President Bill Clinton, that the administration should take BP’s US business into receivership until the spill has been dealt with is a fringe idea at the moment, but could move to the mainstream if BP is seen to be trying to wriggle away from its responsibilities.

Bankers were also quick to dismiss the idea of Chinese buyers, such as PetroChina, given the political resistance in the UK and the US they would face.

After the bruising experience suffered by CNOOC of China in 2005, when it tried to buy Unocal of the US and ran into a storm of protest, Chinese groups have focused on buying assets, rather than companies.

The status of TNK-BP, a delicate joint venture between BP and a set of Russian tycoons which accounts for 10 per cent of BP’s profits and 25 per cent of its resources, is another poison pill to buyers, especially the Chinese.

BP’s Russian partners would be unlikely to look favourably on BP losing its independence.

“I don’t think Russia would have anyone other than BP in the venture,” said Jason Kenney, an analyst at ING, “so the TNK-BP part of the business would most likely have to be sold.”

But if any buyer does try to overcome all these enormous hurdles, it would still need to agree a deal. At the moment, there is no sign that BP is preparing to surrender.

Tony Hayward, its chief executive, has been savagely attacked in the US, but is determined to see the crisis through.

BP’s board and shareholders will also reject anything that looks like an attempt to exploit the company’s difficulties to get hold of its assets on the cheap.

“Shareholders want Mr Hayward focused on fixing this problem. They don’t want to know that he is preoccupied with trying to sort out a deal,” one banker said.

They may feel differently a year from now. Until that happens, bankers are unlikely to pull out their pitch books.

FT.com / Companies / Oil & Gas - Talk of takeover swirls around BP

i would expect that if bp is taken over or threatened with it, or if it tries to split itself, that the federal government would have little choice but to nationalize its us operations.

but they're having some pr trouble:
FT.com / Companies / Oil & Gas - BP faces public relations disaster

as is the louisiana fishing industry:

Quote:

Fishermen Wait on Docks as Oil Gushes
By JAMES C. McKINLEY Jr.

DULAC, La. — This time of year, Eric Authement would normally be buying about 70,000 pounds of shrimp a day from the boats that line the Grand Caillou Bayou and spread their winglike nets in the bays, marshes, coastal waters and inlets along the coast.

But in the last month, the shrimp processing plant his family has run for generations has been much quieter. Some days, he has bought next to nothing.

“We can fly to the moon and back how many times?” he asked as he watched a video feed of oil spewing from the underwater leak. “And we cannot stop up a damn well.”

As vast sections of the sea and coast have been closed off to fishing because of the gushing oil leak, the normal haul of oysters, blue crab and finned fish has been halved, and shrimp production is about a quarter of what is usually is. The exceptions are tuna and red snapper, which are caught far out at sea.

Americans have yet to see major shortages or price increases at restaurants and markets because about 80 percent of the seafood consumed in the United States is imported, according to the National Fisheries Institute, a trade group. Louisiana provides only about 2 percent, the group says.

But the oil slick is wreaking havoc on the fishing industry here, which brings about $2.4 billion a year to the state, the state’s seafood marketing board says. At least 27,000 jobs depend directly on the fisheries.

So far, Louisiana’s official biologists have found no evidence that the oil has contaminated any seafood. But the precautionary closing of oyster beds, shrimping grounds and crab habitats where oil has been spotted has idled most of the fishermen.

And BP has hired so many fishing boats to help with the cleanup effort that the areas that remain open are not being fished intensively.

The images of oil slicks at sea and goopy oil in stands of cane along the state’s 7,700 miles of tidal coastline has presented the Louisiana fishing industry with a public relations nightmare.

Some buyers assume the catch is polluted; others simply would rather not buy a product now with the name Louisiana or gulf attached to it, seafood wholesalers say.

“The brand itself has been damaged,” said Ewell Smith, the executive director of the Louisiana Seafood Promotion and Marketing Board. “Every time they show the image on TV of the spill, people are thinking we don’t have safe seafood and that we are out of seafood.”

Some seafood processors say the biggest hindrance right now is not oil, but a lack of fishermen to haul in the catch in the areas still open to fishing.

Mike Voisin, the owner of Motivatit Seafoods in Houma, has been an oyster farmer and processor in Terrebonne Parish his entire life. He said the state had found no evidence the oysters have been contaminated, yet he cannot find harvesters to dredge up the crustaceans from their beds because the oil companies have hired so many boats.

“We are down to 10 or 20 percent of our harvesting ability,” he said.

In the meantime, the oil slick and chemical dispersants are getting closer to the oyster beds, and many in the business fear the pollution will be driven inshore by tropical storms and will kill the larvae on which the next year’s crop depends. Since nearly 4 of 10 oysters eaten in the United States come from Louisiana, shortages are inevitable if the closures persist, oyster farmers say.

One bright spot for seafood producers is that scarcity has driven up prices. Small brown shrimp, for instance, have tripled in price over this time last year. The price of oysters has also risen on spot markets in recent weeks, jumping more than 20 percent in some places.

Still, with the constantly changing plans to close certain fishing areas, some say it is not worth gambling the price of labor and fuel to go after shrimp that may have fled from the area or oysters that may have been contaminated.

Instead, many fishermen have taken the $5,000 check from BP — a down-payment on future damages the oil company has voluntarily paid to fishing operations — and are waiting on the docks to see what will happen.

Fishermen who concentrate on tuna and red snapper are still hauling in large catches far out beyond the oil slicks, but they are having a hard time convincing buyers their catch is clean.

David Maginnis, the owner of Jensen Tuna in Houma, said most of his tuna fleet was working around undersea canyons in the southwestern part of the gulf, a good 150 miles from Louisiana. He supplies high-end sushi bars across the country with fresh blue-fin and yellow-fin tuna. Some buyers have canceled orders, he said.

Only 6 of 10 tuna boats are going out now, he said, but “the ones that are going are banging them up,” Mr. Maginnis said, using slang for a large catch.

Despite the plentiful fish, many boat captains cannot find enough deckhands. “They are getting paid by BP to not go to work,” he noted.

The biggest impact of the spill has been felt by shrimpers and shrimp processors. Bo Thibodeaux, 43, a shrimp boat captain in Dulac, took a small boat out recently with his son Evan, 17. He said he had tried to go out twice in his 43-foot boat, the Bull’s Prize, since the spill started, but could not catch enough shrimp to pay for the gas.

“We are going to try to get what little is left,” he said, as he readied the boat and his son pulled on white rubber boots. He said that in past years, when the brown shrimp were out around this time of year, he could pull in 12,000 to 15,000 pounds of shrimp from the water.

Now his nets have been catching mostly water because the areas he shrimps have been closed.

“May is our time to make our money,” he said. “I don’t know what I’m going to do. Go find a job, I guess.”

Oil Spill Idles Many Louisiana Fishermen - NYTimes.com

a story from a few days ago about the marshes:

Oil Cleanup Poses Risks In Louisiana's Fragile Marshes : NPR

and another element about bp's information management:
http://www.stumbleupon.com/su/6bwnjH...ummer-2010/r:f