Article - http://toronto.ctv.ca/servlet/an/local/CTVNews/20090323/Suncor_merge_090323/20090323/?hub=TorontoNewHome
Summary
This article summarizes the merger between Suncor Energy Inc. and Petro-Canada. With this merger, the largest energy corporation in Canada and fifth largest in North America is subsequently formed. Stockholders in both companies will then retain a certain amount of stocks in the newly-created company, 60 percent for the Suncor shareholders and 40 percent for the Petro-Canada shareholders. The merger is said to been “more than just a strategic fit and that the two companies shared ‘common ground’ with their corporate visions.” It is expected from the companies that they will save approximately $1 billion through “elimination of redundant spending and targeting capital budgets to high-return, near term projects.”
Connections
There are several ties this article has with chapter 10 in the textbook. The merger between Suncor Energy Inc. and Petro-Canada can be seen as a partnership. However, these companies are in fact corporations, each having their own shareholders and workers. Because of the two companies combined together, expenses could be cut and therefore more profits could be earned. The combined assets of both companies help them against our current economic conditions.
Reflection
Mergers are very big changes for both the companies and those that work for them. I have some experience as to how they affect the workers, as my sister is in a company that had been in a merger not so long ago. The transition puts a lot of strain for both sides, especially the lesser dominant company. Workload becomes heavier with information having to be transferred from company to company. Given that certain personnel are no longer needed, layoffs would occur, affecting many individuals via job losses. Mergers provide a new environment for both company heads and workers, and are ultimately done to achieve goals such as lower spending and higher profits.
5 comments:
I must agree that merging big companies like Suncor Energy Inc. and Petro-Canada can bring positive and negative effects. Because of these two oil and gas giants are merged, they are better positioned to compete globally in this recession. Since many big corporations are trying to cope the bad financial crisis, merging from 2 companies to 1 company can be an ideal solution. As stated in your source article, the companies can save $300 million in operating expenditures annually and also expects to save $1 billion from other expenses. This can be some of the advantages of merging. I must agree it will create job losses, and the system complex. However, in both companies’ CEO perspective, helping the companies save expenditures in this recession is more important than worrying about potentially laying-off workers.
Michael Li
Block F
Your article just reminded me of Money Management. Oh my.
I'd say that companies that merge--like Suncor and Petro-Canada--don't have the short-term goals in mind, such as the tough transition and bigger workload that you mentioned. Instead, they look at the big picture and realize that merging will have benefits in the long run and will allow the companies to reach their goals sooner. The long-term goals are obviously more important in the eyes of the executives working for their respective companies, and decisions are made upon those goals. If I were to work for a recently merged company, I would most likely find it hard to adjust to everything that changes, but then again, if it means that the companies' futures would be better in the long run, then who am I to complain?
Ashley Chow
Block E
The merging Suncor and Petro Canada means the creation of a company that would operate under a monopoly-like industry as these are the largest suppliers of energy in Canada. This may prove to have negative effects on consumers as prices would increase due to a lack of competition in Canada. As mentioned, layoffs will also occur due to the merging of the companies. Increased unemployment would most likely occur in Alberta. Though there are short term negatives, the future benefits may off set them, as the valuable resources of each company would combine to form a partnership that can compete globally and strengthen the Canadian economy. Overall, when determining whether this partnership will have negative or positive effects, one has to weigh the effects of increasing petrol prices as well as the layoffs against the long term benefits brought to the economy by the merging of these two companies. We will have to see in the future whether or not this partnership will actually pay off.
J. Tam
Block F
The merging of Suncor and Petro Canada can lead to benefits and negative down sides. The positive part is that it is now the biggest company in Canada and the 5th largest in North America. They can now compete in the economic recession. In the future, the company will have more benefits. On the other hand, I agree with what Michael Li stated that it leads to lay-offs because of the merging. However, I think we will see a more positive side to this merging in the future.
K. LAU
blk f
I believe that this merge of two major companies – Suncor and Petro-Canada – will result in very positive outcomes. I agree that a merge can definitely be tough, bearing in mind the amount of stress, information needing to be transferred, some layoffs possibly occurring, and the decision making taking longer; many of these negative effects are short-term. In the long run I believe that everything will work out for the better. I definitely find this partnership to be successful because they will become huge competition against many other oil and gas companies. Although, we will just have to see how this merge turns out in the future.
-Stephanie Murao
Block F
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