ANALYSIS MERGER OF PETROCHINA COMPANY LIMITED AND SINOPEC LIMITED USING DISCOUNTED CASH FLOW METHOD

• Main Author: Ramadhana, Marissa
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/72453
• Institution: Institut Teknologi Bandung

Merger and acquisitions or we could call it M&A is one of several method for a company to use to enlarge its power, also for a company in crisis. In the past decades, we have been using oil as our first resource of energy, however, there is a new resource of energy that has been developed in America which is shale oil, due to that, the demand of oil is decreasing compared to these last decades and it made oil price decreased dramatically. PetroChina Company Limited and Sinopec Limited are one of several successful company in oil & gas fields based in China, but due to the crisis, both companies experience an increase from 2010 – 2014. In order to still on business, need to decrease its cost such as labor cost also decrease a budget to open a new drilling area. Thus, one of a solution for the company to stay in business is to be merged with another company in order to decrease its cost and increase company profit and shares also being merger with another company could increase the company power. However, the government in China decline this issues regarding the merger of two successful companies. Due to the that, the author decide to make a research about the impact for both companies if they are being merge with each other whether it will increase its company power and China power on world oil price as well as decreasing the production cost and increase its income or not. The author will use data of both companies from Annual Report and Capital Market Data of PetroChina Company Limited and Sinopec Limited from year 2010 – 2014, to help the author calculate the synergy of both companies after being merger and to find the valuation of the two companies by using discounted cash flow. The research use PEST and SWOT Analysis to identify the condition of internal and external situation of both firms. The findings suggest PetroChina Company Limited and Sinopec Limited to be merge since its create synergies. Based on three scenarios, the synergies which created in pessimistic, mostlikely and optimistic scenarios are ¥820,832.78, ¥844,294.71 and ¥ 1,344,618.97.