Evaluation of Synergy Effect in the Merger of Companies in a Petrochemical Complex

摘要

Mergers and Acquisitions (M&A) have been actively carried out in the petrochemical industry. However, the synergy created by the merger of petrochemical companies has seen relatively little study, despite being the primary goal of a merger. This study deals with the horizontal merger of petrochemical companies located within a single complex. Synergies considered in this paper stem from integration of the process network and the utility plant, fixed cost reduction, and contracts in purchasing and selling. A novel mathematical model that represents the operation of a process network and a utility plant and the decision for purchasing and selling contracts is formulated. Four contracts for purchasing and selling are considered. The proposed model is applied to three Korean Naphtha Cracking Center (NCC) companies located in the same industrial complex. The results show that synergy effects from integration of the process network and the utility system, fixed cost reduction, and increased market share together increase profit by fifty percent.