Based strictly on the numbers, there is no chance that Exxon Mobil is going to buy out the remaining public stake in Canadian subsidiary Imperial Oil.

The MBA types have all crunched the numbers, and concluded that despite Exxon's staggering cash generation, using more than $15-billion to mop up the 30 per cent of Imperial it doesn't own is a poor use of capital.

That hasn't stopped Imperial stock from staging an impressive rally. Takeover speculation, along with a dividend hike and generally bullish sentiment on energy, pushed Imperial stock up yesterday by more than 4 percent. That marked the seventh gain in eight sessions.

The wild card here is Exxon's overall strategy for its Canadian holdings. Buying Imperial doesn't make sense if the world's largest oil company is simply interested in the status quo in this county. But, and this is a big but, what promises to be a contentious buy out does make sense if Exxon is about to embark on an expansion of its Canadian operations. (Jarislowsky Fraser and other minority shareholders would salivate at the chance to extract the best possible terms from Exxon.)

It makes more sense to acquire rivals in this country with Exxon stock or cash than it does to stage takeovers via a partly-owned subsidiary. This logic underlies Royal Dutch Shell's recent move to take full control of its Canadian unit. If Exxon's brain trust has decided to make a bigger bet on the oil sands, for example, then an Imperial buyout would mark the first in a series of monster deals.