Figure 1. Weighted-Average Share Price, 1995-1999

Source: Research Insight, a service of Standard and Poor's Compustat.

The primary motive for merger is to enhance shareholder value. A straightforward measure of shareholder value performance is a company's share price. Over the 1995-1999 period, the share prices of two mega-merger companies, BP Amoco & Exxon Mobil (shown on a combined basis), have far outperformed the other integrated majors reporting to the FRS. The surge in the share prices of the mega-merger companies occurred subsequent to the mergers. Chevron has done a bit better than other integrated majors and Texaco has about matched the performance of other majors overall.

Figure 2. Return on Equity, 1995-1999
(Weighted Average)

Source: Research Insight, a service of Standard and Poor's Compustat.

Profitability is an important element of financial performance. Here profitability is measured by return on equity, which is corporate net income divided by stockholders' equity. As measured by return on equity, Chevron and Texaco have done somewhat better than other integrated companies over the 1995-1999 period, but not as well as the mega-merger companies, BP Amoco and Exxon Mobil.

Figure 3. Total Assets, 1995-1999
(1995=100)

Source: Research Insight, a service of Standard and Poor's Compustat.

More striking than the differences in profitability are the differences in corporate growth, as measured by total assets. BP Amoco and Exxon grew more than 50 percent over the 1995-1999 period, with the mergers providing most of the boost to their growth. Chevron and Texaco grew slightly faster than other integrated majors, but not nearly as fast as the mega-merger companies. (Note: Had Chevron and Texaco's proposed 1999 merger occurred, the surviving partner, Chevron, would have registered a doubling in total assets between 1995 and 1999.)