Repsol and YPF: a perfect solution Harvard Case Solution & Analysis


YPF is an oil and Gas producing company which was established in Argentina. The company was first nationalized by the government. However, after the economic instability in the company, foreign investment in public company,in whichYPF was also included, was offered. Repsol, interested in foreign investment, purchased 98%shares of YPF.

In 1999, the Repsol, which is a Spanish oil company, purchased 98% shares of YPF worth $15 billion. After acquisition, name of the company was changed to Repsol-YPF. This deal and acquisition of YPF was said to be the “perfect marriage”.

However, in 2002, it was announced that government is expropriating YPF as it is the sovereign power producing company of the state. Moreover, the political and economic condition of the country was being soworse that it was essential for the Government to take such steps in order to maintain public interest.

The step of seizing YPF’s shares has many political and economic risks that are related to the government’s decision. Moreover, the Repsol can also take legal steps against the government of Argentina thatwould be unfavorable for the situation that is going on in the country.






Question 1: was it a good idea for Repsol to enter Argentina in 1999 or should it has seen this coming?

Repsol entered into international market in 1999, in order to stream upwards. One of the international energy producing market contains Argentina, in which the company chose to buy 98% shares of YPF, which is said to be one of the most oil and gas producing company in the country/ however, after small period of time, Argentina faced bad economic situation with the currency crises. This inflation resulted in changing of political situation. The changing in economic and political situation caused the change in government. As a result, the new government announced to expropriate the YPF, which means the takeover of YPF for public interest.

However, Repsol should have done pre shares purchasing analysis of company and the country. That would inform the company to be sure about the country’s political and economicstates that are going to change soon. Moreover, the Repsol should have entered country where there is a developed economy and are not facing any kinds of crises so that there would be secure and profitable investment.

The loss of Repsol investment in YPF can be recovered by filing law suit against Argentina. Moreover, the compensation money can also be demanded by the Government of Argentina that would help to cover theloss faced by Repsol in order to investing in Argentina private company...................

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