Repsol Takeover Bid For YPF Harvard Case Solution & Analysis

Repsol was Spain’s largest oil company. It has 60% share of the oil industry, and it owns about 50% of the petrol stations in Spain and company also has a 45% market share in the gas sector owning many wholesale and retail grid operators. Repsol is considered the flagship company of Spain, and it also has played commercial monopoly in the market. At the time of 1981, millions of dollars were invested into the company to boost its growth and enable it to compete with the European companies in the country so, it become Spain’s largest company in terms of turnover and profits.
The company has enjoyed huge growth in the domestic market, and it also expanded to regions such as Argentina, Egypt, Mexico, Colombia, Algeria, and Indonesia. It has strong marketing and sales experience in the industry due to the strong network of distribution throughout the world. The growth strategy of the company was getting geographical axis, and diversifying the business in terms of revenue streams, and to geographically support the firm’s growth strategy. So, for expansion it has two strategic approaches one to stick with status quo, or second to acquire a company into the integrated oil industry to benefit from the synergetic effect.
Repsol has been considering to acquire an Argentinean companyYPF which was nationalized company completelybythe government of Argentina. So, increasing size of the company and market demands created complexities for the company to operate, and manage operations, and it lost around $6 billion over the period from 1982 to 1989. The option to government was to privatize the company, and operate publicly. Since, Repsol has already acquired 14.99% shares of the company, but could not assume the control of management. However, it anoption to bid for the company before it is sent into the open market. So, it was aconcern for Repsol that would acquiring YPF be a strategic move, and could Repsol manage the operations of the both companies, and would it be able to leverage the investment and benefit from the synergetic effect, and would there be any sustainable growth. If yes then what bid should Repsol offer for the acquisition of YPF?

Repsol Takeover Bid For YPF Harvard Case Solution & Analysis
Question 1
Strategic Position
Repsol’s strategic position is into the refining and marketing sector of petrol, and it has good understanding of the market because it has a strong network of distribution throughout the world. On the other hand, the company has also involved in the gas industry to grow in the market to save it from a possible takeover by a medium-sized company. So, Repsol’s position has become threatened that it might be taken over in the market. Hence, it has two options to save itself, one is to grow by size and market capitalization, or second acquire a company, and increase in size, and achieve good growth in less time with less efforts. Meanwhile, first option is not applicable given that it would require huge time to grow, but the second option seems to be feasible.........

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