MW Petroleum Corporation (A) finance case

Amocos strategy is to rationalize its operations by shedding assets that are not contributing significantly to the companys gross margin. This is reasonable as both the direct costs and overhead cots are high. The company is very large and the management appears unable to manage the operations as they are right now. Apache on the other hand is seeking to grow. This is a good opportunity for the company to do so. This transaction would be beneficial to Apache the portion of MW Petroleum that Apache is considering is located in the same general area where the company currently operates and so consolidation will further reduce costs. This should allow for increased economies of scale in the form of reduced direct operating costs and even more so overhead costs for Apache. It is cheaper for