Shkil N. O., Shereverov I. U.

Oles Honchar Dnipropetrovsk National University


During the last 20 years, the influence of the East on the West has been greatly intensified. More and more corporations, holdings and companies from Eastern Europe (mainly Russia and Belarus) are seeking ways to work with the Western European countries or Western European companies. This cooperation is divided into different causes and types. These causes and types at the same time have different consequences. Causes can have both positive and negative implications for both sides of takeover. Let's focus on cooperation in the sense of acquisition. In this article we will discuss the acquisition of western companies and eastern ones, that is the purchase of the British oil company "Beyound Petroleum" (TNK-BP) by Russian state company "Rosneft".

In October 22, 2012, the management of "Rosneft" and Shareholder "TNK-BP" signed the first contract on the way to purchase. Possible acquisition consists of two stages. Initially BP will sell its 50% shares for $ 17.1 billion cash and 12.84% of shares „Rosneft“. The consortium “AAR” sold to “Rosneft” the remaining 45% of shares.

London-based BP will use $ 4.8 billion cash from the sale of its shares to buy 5.66% shares in the "new Rosneft”. Then it increased its shares in Russia's largest oil company by 19.75%, whereas 1,25% they have already had. BP has received 12.84% of “Rosneft”, at $ 8 per share, from the state holding "Rosneftgaz" owning 95% of shares of "Rosneft".

The acquisition has the following advantages and disadvantages for customers, interested countries and companies. In this situation, there are a number of advantages:

• Through the acquisition, Russia can strengthen its competitive position. “Rosneft” satisfies the need for oil and gas of about half of the energy sector in Russia and some European countries. This acquisition will make ”Rosneft” the largest oil company in the world.

• The acquisition accelerates the entering of the company into new markets and significantly reduces the number of market barriers and their relevance to the new company.

• Increase of the market shares is one of the potential advantages of the acquisition. It concerns to the markets at which the company is already active.

• Strengthen the independence and the brand at the global market is a clear advantage for the company.

• “Rosneft” could monopolize the purchase of national markets. However, this is only a one-sided advantage for the company.

• Companies can save the expense of "economies of scale" and "economies of scope". Subsequent effect may be the price reduction. It is mutually beneficial for the customer and the business.

Due to the above mentioned points, Russia represented by “Rosneft”, may increase its influence on the EU. After the acquisition, Russia will have more opportunities to continue its strong influence on the West.

Analyzed situation has its drawbacks:

• Government or public of the country, however, may be against the acquisition.

• Negative impact on the economy, on the government and on the public is one of the weaknesses in our example (the example of the acquisitions).

• Innovations or changes in management.

These deficiencies are significant for both sides, both the east (Russia) and the west (GB and «BP»). For the future of the new company decisions taken by the new leadership are of great importance.

As result, we came to the following conclusions. Acquisition "Beyound Petroleum" has both positive and negative consequences for all participants. Advantages and disadvantages are fully represented and analyzed. Lower prices and higher quality of the product determined to be an important elements for customers. Reduction of costs through "economies of scale" and "economies of scope" and more market share are important issues for the owners, due to absorption of improvements in the new company and its position at the market of the largest oil companies in the world.

According to our data, we can say that in recent years, the influence of the East on the West is intensified in the economic sense. Corporations, holdings and companies from Eastern Europe (Russia and Belarus) absorb Western corporations. In the next 10 years, this trend will be even stronger, more Eastern companies will seek for cooperation with the Western ones or acquisition because the economic situation in Russia will improve.