However, with the nationalization of the oil industry in Kuwait, Iran, and Venezuela, Gulf Oil's overseas upstream oil production was almost wiped out. In addition, in the mid-to-late 1970s, Gulf Oil bought some non-oil "diversified" projects that were not well managed and almost all suffered losses, so it had to be disposed of one by one. In addition, the gradual decline in oil prices in the international oil market since 1981 caused Gulf Oil's profits to decline. In 1982, although the total turnover reached 30.6 billion US dollars, the profit continued to decline, with a profit of only 900 million US dollars for the whole year. This also caused Gulf Oil's stock price, which had long been maintained at 40 US dollars per share, to quickly slide to less than 30 US dollars per share.
At this time, Gulf Oil's board of directors made another unforgivable mistake. Other oil companies were in a bad situation. However, other oil companies quickly made up for the shortage of reserves and increased oil production by merging enterprises, while Gulf Oil's board of directors decided to borrow heavily from banks and repurchase the company's shares from the market in an attempt to reverse the decline in stock prices. Unfortunately, this wrong approach caused a serious imbalance between income and expenditure, and eventually caused the company to be heavily in debt, with poor capital turnover, and fell into trouble.
Just at this time, a real villain appeared. He was Pickens, the owner of Mesa Oil, a small American oil company.
This guy had long been targeting the troubled Gulf Oil Company. He began to buy Gulf Oil's shares on the stock market as early as 1980, and publicly announced in November 1983 that he had acquired 13.1% of Gulf Oil's shares and demanded to join the Gulf Oil Board of Directors. At the same time, this guy also proposed a proposal to dismember Gulf Oil and greatly weaken the power of the company's board of directors and management, but it was flatly rejected by the company's board of directors.
However, Pickens' proposal was well received by most shareholders, so Gulf Oil was in chaos. Pickens' Mesa Oil Company took the opportunity to persuade Drexel Bank to provide financial support to acquire more shares of Gulf Oil Company and gain control of it. The board of directors of Gulf Oil Company was shocked when they heard the news. The company was indeed in trouble. The directors believed that they would rather merge with the big oil company than let Pickens' conspiracy succeed!
The news spread. Standard Oil Company took the first move, but its offer was too low. Gulf Oil Company considered it an "unfriendly" merger and rejected it. Later, ARCO Company, with the support of Chase Manhattan Bank Group, proposed to acquire Gulf Company for $13 billion. However, Standard Oil of California, which had the backing of Bank of America Group, immediately offered an "olive branch" of $13.3 billion. Gulf Oil Company finally accepted Standard Oil of California's offer. The two sides reached a deal in just over a week in a "blitzkrieg". From then on, Gulf Oil Company, once one of the Seven Sisters of Oil, fell into the arms of Standard Oil of California. A once-famous oil giant completely disappeared!
This merger was the largest merger in history at the time, and the decisiveness shown by Standard Oil of California in this merger has always been praised by later generations.
After acquiring Gulf Oil, Standard Oil of California acquired Texaco, another one of the Seven Sisters of Oil, in 2001, and eventually became ChevronTexaco, which later became a regular in the top ten of the Fortune 500.
However, Goldman Sachs did not appear in this merger and acquisition case, but Mike Aller said this now, which made Yang Jing a little puzzled.
Soon Yang Jing asked the question in his mind. He had to ask because it involved the CEO of the Dragon Fund, so Yang Jing had to be careful.
Mike Aller quickly explained this question to Yang Jing. "Yes, Goldman Sachs was not involved in the merger and acquisition case. That's because Goldman Sachs was completely out of the game before the merger and acquisition case even started."
After a pause, Mike Aller continued, "At that time, Arco actually first contacted Goldman Sachs. As the person in charge of the merger, David pointed out that the acquisition price proposed by Arco was too low. The price of $13 billion was not enough to impress the board members of Gulf Oil. The price should be raised to a minimum of $13.5 billion. If a competitor emerges, the price needs to be raised further. After all, although Gulf Oil is not doing well, the backbone is there. The name of the Seven Sisters of Oil is not a joke. Even if the acquisition price is $13.5 billion or even higher, it is definitely worth it."
"But David's proposal was considered too radical by Goldman Sachs' top management, so Goldman Sachs could only offer $12.5 billion in support to Arco. As a result, Arco turned to Chase Manhattan Bank Group, because Chase Manhattan Bank Group could provide Arco with at least $13 billion in support."
"It was later proved that David's proposal was not radical at all, but just right. If the top executives of Goldman Sachs had agreed to David's plan and directly provided $13.5 billion in support to Arco, then even if Standard Oil of California joined in, it would probably not have been able to get Gulf Oil. But because of the caution of the top executives of Goldman Sachs, they lost Arco and were completely eliminated from the merger. In the end, David took the blame and resigned in anger."
After this explanation, Yang Jing understood.
"Mike, according to what you said, David did nothing wrong in that merger?"
"Boss, that's not the case. If David's personality was a little more flexible and he could say the same thing in a different way, maybe he could get recognition from the top management of Goldman Sachs. But unfortunately, although this guy is talented, his character..." Mike Aller shook his head.
PS: I would like to thank "Kunpeng3357" for the reward of 200, "Iced Octave", "A Little Monkey", "Flame Tianhuang", and "Some Gouache and Ink" for the reward of 100.
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