Research Paper on:
Gulf Oil Case Study

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of Gulf Oil, including Atlantic Richfield Company (ARCO) and bankers from Kohlberg. Kravis, Roberts &Co. The later was the more serous offer as this was, effectually, a buy out offer  from Gulf themselves and as such there would be both better inside knowledge and a potential greater motivation from many involved as well as having good financial leverage. Keller,  the subject making the decision is working for the Standard Oil Company of California (Socal). Gulf oil was on the market following an attempt by Boone Pickens of Mesa Petroleum  Company. This was a company that have been good at spotting oil companies that were under values and then buying them for a short term profit, previous endeavours had seen  the oil company sold stock in a tender offer, in another there was the passing on of stocks and selling the shares on. It is understandable Gulf did not want  a company to purchase them which looked only at short term profit and would mean the control could end up in very different hands in the future.  Mesa Petroleum Company had already bought 9% of the shares whilst trading at between $39 and $43 a share. If we look at table 1 below,  we can see how, with a simple analysis it is possible to see how Gulf oil was in a position which would make asset stripping very easy, and it could  be seen as under valued. By taking the $43 a share and multiplying it by the number of shares outstanding we get a figure that shows us how much the  company is valued at with the shares trading at this price. To assess if this is an under or an over valuation a very crude measure is to look at