The oil industry is a notoriously leaky place when it comes to keeping major corporate events a secret, so BP and Amoco are no doubt delighted that their proposed merger - which at $110 billion is way up there in the pantheon of international unions - was kept secret from the markets until the two marriage partners were good and ready to read the banns.
Judging by the reaction in the market, it would seem that investors believe that Amoco - the junior of the two companies with half the profits last year of BP - has got the better of the deal. Amoco shares were trading at one stage 17 per cent above the overnight level while BP shares, after soaring 16 per cent at the opening bell in London, were trading less than 5 per cent higher at the close.
But irrespective of who has got the best deal from the merger, it seems clear that this is one that will get the nod from shareholders of both companies, given the scale of savings that will be generated as a result of post-merger rationalisation and restructuring. As the undisputed number three in the oil league, BP/Amoco will be a major player.
Just as the 1980s was the era of the now-discredited leveraged buy-out, the late 1990s is the era of the cross-border merger, with mega-billion deals in a whole variety of industries - telecommunications, pharmaceuticals, chemicals, financial services, accountancy and now, oil and gas.
Global alliances mean greater scale, greater presence and greater profits - at least that is the theory. Bigger, it seems, will definitely be better. Mergers mean the two partners can exploit enormous economies of scale in production, distribution, marketing and crucially - in areas of expensive research like petroleum, pharmaceuticals, computers and telecoms - research and development.
And unlike the unseemly squabble earlier this year involving potential merger partners Glaxo Wellcome and Smith Kline Beecham as well as Ernst & Young and KPMG, Amoco and BP have been ensuring that there is no who-does-what squabble between the top management of both companies post-merger.
The roles of the BP and Amoco chairmen (Peter Sutherland included) and chief executives appear to be clearly defined and it is unlikely that the Glaxo/Smith Kline fiasco will be repeated in the BP/Amoco situation. The top jobs have been divvied out, so management - the crucial factor in a merger of this scale and complexity - is happy.
At nearly £70 billion, the value of Amoco-BP is one-and-a-half times that of the entire Irish stock market. But has this latest example of global merger-mania implications for the major Irish companies, especially postEMU when the Irish financial sector loses its traditional protection? If bigger is better, does it mean that AIB, Bank of Ireland, Smurfit, Elan, Kerry, and others will have to find friendly merger partners if they are to retain at least some of their independence?
Smurfit has already recognised the need for merger in its own sector with the planned link-up with Stone Container. But so far, none of the other major Irish corporates have sought out a major international partner, preferring to build up their own asset base through acquisitions, most of which have been extremely successful. But those successful acquisitions have made many Irish companies more and more attractive to potential buyers and merger partners.
If bigger is really better, then many Irish companies would no doubt be happier with a friendly merger partner - where management would have an input into the enlarged group - rather than being an appendage in the international operations of a hostile bidder.
