Increased competition en- sued, both at national and international levels, and as a result all the power companies review- ed the strategies they had pursued up to that time. Aktiengesellschaft — was, at the end of the s, Cover 21 The case study The companies involved E. In sult, exerted complete business control. At came the surprising announcement that E. As sales of activity to a straightforward financial sharehold- oil products were stagnating, Aral success- ing.
As a result, E. Outside Germany, however, Aral was only present in the central European countries Veba Oel, located in Gelsenkirchen, was at this of Hungary, the Czech Republic, Poland, point an oil company which was completely integ- Slovakia, Austria and Luxembourg, with a rated across the value chain. Aral was thus only a strong local player. VOG was, however, in to Up to too small in comparison with its competitors 31 December Veba Oel generated and was not able to achieve the balance of annual pre-tax profits of million and portfolio investments in a variety of product- had 8, employees.
The mar- multinationals — able to make investments ket was characterised by falling turnover, in giant fields without a partner. PdVSA in This enabled Veba Oel to halve investment costs and ensure perma- nent access to Venezuelan crude. PdVSA, for its part, gained access to the largest market- ing outlet for oil and oil products in Europe. However, the refinery sector was character- ised by overcapacities and fierce price com- petition.
Petrochemicals was also a cyclical business as far as operating results were concerned. Veba Oel AG — ness was re-organised on 1 January Veba Oel. Veba Oel acquired the remaining shares in Gelsenkirchen 22 The Some of the results of LeO were, all activities in the marketing of liquid oil for example, a management handbook conceived products automotive fuels and the business jointly with employees, regular town-hall meet- in heating oil coming from Veba Oel. The ment process supported by moderators from wit- joint venture with PdVSA was incorporated hin the company itself.
So the aim in these three comp- anies, for example, was to achieve the economies of scale required by entering into different part- nerships. Veba Oel was designed as a holding with strategic and financial management respons- ibilities and with correspondingly reduced staff numbers. The aim of the LeO change project was for Veba Oel to learn to react faster to changes in the business envir- onment, increase its internal efficiency and im- prove its results.
Against a background of poor results, of overcapacities in the refineries due to stagnating markets and of increased competition, all employees were to be mobilised and integra- ted in the LeO project. One of the first measures 23 The case study Strategic background For E. Giving up Veba Oel completely by selling it, 1 In BP and the international, vertically launching it on the stock exchange or ex- integrated oil company Mobil set up a joint vent- changing it for other activities. All the European Strategic background for the takeover activities in the fields of fuels and lubricants of Veba Oel and Aral by BP were combined.
If this stake in Aral could have been expanded. Moreover, with a turnover of around detached, it would have meant a massive strength- The around million , Deutsche BP was the small- 28 ownership structure at Aral was, however, com- est national organisation within BP as a whole — plex. In addition, Little by little, three big owners emerged who all internal studies carried out in connection with had the same voting rights: Veba Oel, Mobil and the introduction of new environmental legislation the BASF subsidiary Wintershall.
Deutsche Hamburg. Cover BP found itself at a crossroads, with two extreme- 29 On Aral, cf. Aral — Alles super — und wie es ly different strategic options: giving up the dazu kam. Gelsenkirchen 24 Aral was the market leader, but it had a but it only had one third of the votes, just like complex ownership structure at the time of the the two smaller shareholders.
In the end, the only possible coopera- BP camp. DEA was more and Mobil wanted to merge and the EU Commis- of a local player with not much in the way of sion had attached strings to its approval of this international upstream activities.
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In Germany, merger. Ending in the petrol station market. For one, Deutsche BP suffered a setback in possible cooperation in the German market. However, the deal foundered in mid on It had to find a new partner or pursue a new different evaluations of the activities of the two growth strategy. For another, this meant that the companies. As a result, it was back to square one ownership structure at Aral, the German market for Deutsche BP.
In the following months DEA, leader in the retail station sector, would change. Wintershall, market.
This meant that Aral could be was now going to be weakened further. Esso and Shell were ruled out because they were both successful companies with international operations, and were — unlike Aral and DEA — vertically integrated across the entire value chain and were better positioned in the German market than Deutsche BP. In any cooperation with one of these competitors in the German market Deutsche BP would therefore have become the junior partner.
There was no interest in buying Conoco because of its low-price policy; 25 ON were to ac- side-effect of the attempt to increase the value of quire majority stakes in Veba Oel and Gelsen- a purely financial stake and make more money berg respectively through capital increases. However, start the integration. From April BP and because of the complex ownership structure at E. ON could exercise their put options and sell Ruhrgas similar to that at Aral , none of the the remaining shares to the contract partner, owners could take control of Ruhrgas, and the who could then completely acquire the respective business remained a purely financial stake for company.
One option for Deutsche BP would have been to launch Ruhrgas on the In the last three years we have succeeded in stock exchange and then sell its own share — the building up outstanding positions in the most resulting proceeds would have amounted to many important markets, but after we ended our joint times the dividends it could still expect.
To this venture with Mobil we had no assets of any note end, the chairman of the Deutsche BP board met in Germany. This transaction has the potential to the member of the E. ON being one of the shareholders us the leading and most successful fuels busi- who — because of E. Why should E. ON agree to Ruhrgas be- but it imposed conditions. Deutsche BP understood the historic opportunity on offer: at one fell swoop — and if things could be settled quickly enough — it could take over the Number 1 in the German retail station market, Veba Oel and Aral, and achieve a comfortable market position for itself.
After intense, but short, negotiations in BP 30 Cf. ON agreed to do business with each other. Ruhrgas stake in deal that would make it market leader The core of the agreement was that BP would in German fuels. They agreed on a two-stage deal.
At Bochum. For BP this amounted to around stations. This was to improve sourcing options for independent filling stations. At that time there were altogether around 16, stations in the German market. The Three of the most important and urgent elements justification given for this step was the of a strategic integration process are: defining exceptional brand awareness of the Aral the strategic direction of the new company, deci- brand in the German retail stations market. The most important strategic — Integrating both companies swiftly in order decisions with regard to the future direction of to create a workable unit in Germany.
Thus BP London, on announcing the deal in its press release of 16 July , already for- 33 BP — BP sells Ruhrgas stake in deal that would mulated goals to be reached through the take- make it market leader in German fuels, www. Basel Fig. You just clipped your first slide!
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