Breakingviews - Buying Pioneer would be iffy use of Exxon capital

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Breakingviews - Buying Pioneer would be iffy use of Exxon capital
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For Exxon Mobil, buying Pioneer Natural Resources would cost a chunky $64 billion. The implied return on investment looks healthy enough under conventional parameters. These days, however, the bar is higher: rob_cyran

would cost a chunky $64 billion. The implied return on investment looks healthy enough under conventional parameters, according to Breakingivews calculations. These days, however, the bar is higher.talks

If Exxon were to pay a 30% premium to Pioneer’s undisturbed share price, the enterprise would cost $68 billion, including net debt. Tax Pioneer’s expected operating profit and the projected synergies at the statutory corporate rate of 21%, and it leads to around $7.2 billion of net operating profit after tax. On those numbers, Exxon’s return would be about 11%, comfortably above Pioneer’s roughly 8% weighted average cost of capital as calculated by Morningstar analysts.

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