The U.S. competition authority, the Federal Trade Commission (FTC), has launched an investigation into ExxonMobil's proposed $60 billion (approximately 78.9 trillion KRW) merger and acquisition (M&A).
According to the Wall Street Journal (WSJ) and others on the 5th (local time), the FTC requested additional information regarding the M&A from ExxonMobil and Pioneer Natural Resources. Pioneer confirmed this fact in a filing submitted to the Securities and Exchange Commission the previous day, stating, "Both companies are continuously cooperating with authorities regarding this transaction. We expect the merger process to be completed in the first half of 2024."
The FTC is an agency authorized to file lawsuits in court to cancel M&As between companies that hinder market competition and violate antitrust laws. WSJ, citing the law firm Dechert, reported that M&A investigations typically take about 10 months. Accordingly, contrary to the companies' positions, there is a possibility that the originally proposed completion date for the acquisition in the first half of next year may be delayed.
ExxonMobil announced the acquisition of U.S. shale oil driller Pioneer in October. Pioneer ranks third in drilling volume in the Permian Basin, a major oil-producing region in Texas. Through this acquisition, ExxonMobil is expected to solidify its position as the largest oil producer in the U.S. by expanding production in the Permian Basin to 1.3 million barrels per day, double the current level.
However, considering the Biden administration's tough stance on 'oil giants' that have earned huge profits amid soaring oil prices, there are growing views that approval from competition authorities will not be easy. If this year's largest M&A deal is completed, changes in the oil industry landscape will be inevitable. In November, 22 Democratic senators, including Senate Majority Leader Chuck Schumer, sent a letter to the FTC warning that if ExxonMobil and Chevron succeed in a large-scale M&A, their market dominance could become excessive, potentially leading to higher gasoline prices for consumers.
WSJ reported that "there have been widespread expectations of an antitrust investigation" regarding this M&A, but "some analysts argue that ExxonMobil and Pioneer’s share of global oil production is minimal, so this deal would not affect gasoline prices." The outlet also noted that companies facing antitrust lawsuits sometimes cancel their M&A plans. Previously, in 2016, the merger between Halliburton and Baker Hughes was blocked by the Department of Justice and foreign competition authorities.
Meanwhile, in the New York stock market this afternoon, the shares of ExxonMobil and Pioneer are trading down about 1.4% compared to the previous session.
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