Not long after the AOL-Time Warner merger was announced in 2000, Steve Case and Jerry Levin came to London to talk to all the UK AOLians and Time Warnerites about the deal. I had just moved to London a few months before, and the main thing I remember from the gathering was Case declaring that his goal was to make AOL Time Warner “the world’s first trillion-dollar company.”
Didn’t happen. Instead, it’s Petrochina, which began trading in Shanghai today. (Meanwhile, the market cap of Time Warner, which dropped the “AOL” from the name a few years back, is $68 billion.)
The FT‘s Lex argues that Petrochina’s trillion-dollar valuation is more than a little iffy:
PetroChina, one of China’s three oil and gas majors, acquired its $1,000bn-plus market capitalisation on the back of a listing on China’s domestic “A” share market, which routinely attributes sky-high valuations to issuers. No wonder: issuers are parsimonious with stock – PetroChina’s mainland free float is a miniscule 2 per cent – and mainland Chinese investors are essentially restricted to buying shares at home. Such favourable supply and demand dynamics explain why the Shanghai market is trading at around 50 times earnings. Pricing the roughly 86 per cent of shares that are held by the state at the slightly saner Hong Kong price gives PetroChina a market cap of $420bn, behind Exxon Mobil.
But that’s still more than Google.