Merger and Acquisition Strategies: A Detailed Analysis of ADNOC

This report provides an analysis of the merger between ADMA-OPCO and ZADCO, which led to the formation of ADNOC in the UAE's oil industry. The merger aimed to achieve operational and financial benefits, particularly in light of declining oil prices. The report details the merger process, highlighting that ADNOC holds a significant interest and discusses the benefits, including enhanced operational tactics, financial strength, and strategic advantages through the integration of offshore experience and decision-making. The conclusion emphasizes the benefits of the merger while also recommending the formulation of new strategies to address the challenges of falling oil prices. The report also references several sources, including ArabianBusiness.com and GulfNews, to support its findings. The merger is expected to be completed in 2018, with the company being strategic in their operations.

Running head: MERGER AND ACQUISATION STRATEGIES
Merger and Acquisition Strategies
Name of the Student
Name of the University
Author note

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MERGER AND ACQUISATION STRATEGIES
Executive summary
The aim of the paper is to analyze the merger that is taking place between ADMA-OPCO and
ZADCO. Both the companies are being merged to for a new company named ADNOC to
flourish in the oil producing industry of UAE. The merger is taking place to achieve operation
and financial benefit. However, they have to form strategy post merger so that they can cope up
with the lowering oil price in UAE.

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Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
Merger and formation of ADNOC..............................................................................................3
Benefits of the Merger.................................................................................................................4
Conclusion.......................................................................................................................................4
Recommendation.............................................................................................................................5
References........................................................................................................................................6

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Introduction
A merger took place between two oil-producing companies that is Abu Dhabi Operating
Co. and Zakum Oil Development Co. The merger that took place will lead to a formation of a
new oil company at the name of Abu Dhabi National Oil Co. Both the companies that are
included in the merger are the offshore operating companies. In the merger the ADNOC holds
60 percent of the interest and other companies that holds the interest are BP PLC, Japan Oil and
other. Both ADMA-OPCO and ZADCO were involved in the production and processing of crude
oil. ADMA-OPCO produces crude oil from Lower Zakum, Umm Lulu and others, while
ZADCO produces the same from Upper Zakum, Satah Fields and others (ArabianBusiness,
2017). The paper discusses about the merger that is happening between these two oil-producing
nations. It further analyses the benefits that comes occurs due to the merger with some future
recommendations.
Discussion
Merger and formation of ADNOC
The merger usually takes place when two companies decide to form a new entity by
sharing their operations and shares (Von Kalinowski, et al., 2016). The merger that took place
between two oil producing company ZADCO and ADMA-OPCO was done to enhance the
efficiencies of the companies. The merger that took place will facilitate and modifies operational
performances of the company (The National, 2017). There merger was planned by the company
in order to improve the operations of both the entities. In the merger, the overall operation of
both the company will be dissolved and a new operating entity will be formed. The merger was

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MERGER AND ACQUISATION STRATEGIES
decided with the aim that consolidating the operation of main offshore oil producing companies
will not affect the fiscal term of the partners. The merger will be completed in 2018 by a steering
committee and with some of its partners BP, ExxonMobil and others (Fareed Rahman, 2017).
Benefits of the Merger
The merger that takes place between companies has a lot of beneficial effect on the new
company that is formed. Thus, merger takes place with the aim of getting the benefits after the
merger (Ferris, Jayaraman, & Sabherwal, 2013). Similarly, the two oil producing expected to get
a lot of benefits from the merger that is being processed. The most important benefit that both the
company will get from the merger is financial and operational benefit. After the merger, the bet
operational tactics of both the company will be used to end up with the best production. Further,
with best production the company will be able to earn better revenue and become financially
strong. The operational performance of the consolidated firm will be enhanced and offer strategic
benefits. The merger will not only unite the companies, it will also unite other aspects as well
such as offshore experience, decision making and governance. Thus, a more upstream business
and future growth will be formed with such a merger benefitting ADNOC, the consolidated
company (ArabianBusiness, 2017). It is seen the consolidation also allows for the
synchronization of various offshore fields used by the merging companies.
Conclusion
From the above analysis, it can be concluded that the merger will prove to be beneficial
for both the oil producing companies and the new company that is being formed. Adnoc is
benefitting a lot in its operation and financially by getting profitable returns from the merger. Th
company has planed the merger with a well planned strategy and holds a 60 percent share in both

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the merging oil producing companies such as Zadco and Adma-Opco. Even though the merger is
continuing and will be completed in 2018, yet the benefits from the merger can be seen on the
process.
Recommendation
The merger will be beneficial on various grounds and as planned by the merging
companies and new formed company, yet it could face some difficulties. The company is doing
the merger for saving their cost; however, the company will be facing threat from the lowering
price of the offshore oil. Thus, the company will face difficulty to cope up with the revenue
compared to the cost, compared to the recent falling prices. Thus, it is necessary for the company
to be strategic in their operations and compete successfully. Thus, the merger might prove to e a
failure if such steps are not taken appropriately. However, keeping in mind the lowering prices
the newly formed company should formulate a new strategy, while the merger is going on. It will
be useful if the strategies are formed and they are ready to succeed before 2018.

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References
ArabianBusiness.com. (2017). ADNOC plans to merge offshore oil firms in cost-saving
measure. Retrieved 17 November 2017, from http://www.arabianbusiness.com/adnoc-
plans-merge-offshore-oil-firms-in-cost-saving-measure-647683.html
Fareed Rahman, S. (2017). Adnoc to integrate offshore oil firms amid drop in oil
prices. GulfNews. Retrieved 17 November 2017, from
http://gulfnews.com/business/sectors/energy/adnoc-to-integrate-offshore-oil-firms-amid-
drop-in-oil-prices-1.1906947
Ferris, S. P., Jayaraman, N., & Sabherwal, S. (2013). CEO overconfidence and international
merger and acquisition activity. Journal of Financial and Quantitative Analysis, 48(1),
137-164.
The National. (2017). Adnoc combines its two largest offshore units, part of Abu Dhabi state oil
firm’s streamlining efforts. Retrieved 17 November 2017, from
https://www.thenational.ae/business/adnoc-combines-its-two-largest-offshore-units-part-
of-abu-dhabi-state-oil-firm-s-streamlining-efforts-1.162610
Von Kalinowski, J. O., Sullivan, P., McGuirl, M., Folsom, R., & Fine, F. (2016). Determining
Legality and Defenses (Vol. 2). Antitrust Laws and Trade Regulation, Second Edition.