Boeing Pros And Cons

• Transaction structures—the takeover could involve a cash offer, a share offer, an asset swap or a combination of these methods. Need to consider legal, taxation and accounting issues.

In this chapter, we first provide coverage of expansion through corporate takeovers and an overview of the consolidation process. Then we present the acquisition method of accounting for business combinations followed by limited coverage of the purchase method and pooling of interests provided in a separate sections.

Sometimes a firm will be touted as a possible acquisition candidate because the replacement value of its assets is considerably higher than the firm's market value. For example, in the early 1980s, oil companies could acquire reserves more cheaply by buying out other oil companies than by exploratory drilling. However, the value of an asset stems from its expected cash flow, not from its cost. Thus, paying $1 million for a slide rule plant which would cost $2 million to build from scratch is not much of a deal if no one uses slide rules.

During the late 1950s and early 1960s, several large corporations began acquiring other companies to diversify their operations. Diversification allowed them to offset their losses in a failing industry with profits from other unrelated, successful industries. Such phenomena caused

Although there is a high degree of attention on the financial calculations in these strategic decisions, Cartwright & Cooper (1992) show that 50 percent of all acquisitions fail financially. The reason for this is usually that the human factor plays a larger role than what is recognized during the decision process. According to Buono & Bowditch (1989) most of the problems that affect the result occur internally by the dynamics in the new organization. The human factor is therefore an element that should not be ignored during those strategic changes. A merger is not something that happens to an organization, it happens to the people within the

Naturally, in order to justify the acquisition premium, the acquiring firm needs to derive more than the acquired firm's intrinsic value. If it did, the acquiring firm would overpay. Thus, the acquiring firm needs to view the assets of the acquired firm as being more valuable to it than to other buyers. This value is called synergy, and it derives in a few different ways.

Buyers don’t often prefer this result as their purchase price recovery is pushed to the time of sale or other disposition of target’s stock, and there is no intermediate benefit as corporate stock is not depreciable or amortizable under US tax principles. As such, buyers, in general, prefer to acquire assets which allow faster purchase price

The main goal of a business combination is business expansion. The process of two or more companies coming together under a common control in order to expand is known as business combination. There are two methods that a company can expand, which are by internal expansion and external expansion. First, internal expansion is the ability to increase business operations without any outside activities, such as advertising and marketing. Secondly, external expansion is when one company overtakes another company in order to be more successful. External expansion can be achieved through vertical integration, horizontal integration, or through a

According to the finance literature, a takeover is a process whereby a firm acquires another firm, resulting in a change of the controlling interest of the acquired firm. Takeovers can occur through acquisitions, proxy contests and going-private transactions. They can be friendly when the management of the target firm is receptive to the bidder offer or they can be hostile when target firm managers resist takeover attempts by using defensive tactics. According to Ross et al (2010), takeovers can result in change of firm policies, layoffs, terminations, or overhaul of business operations.

in the target company after crossing their threshold of 25% is entitled to make a Mandatory Tender Offer for the rest of

A business with a good management and robust internal processes would be quite useful to the buyer and will enable the buyer to improve their own after the merger/acquisition.

A Merger and an Acquisition are two different processes. The results can be similar in the end but the the ways the both processes work are different;

In order to achieve economic goals, stay competitive and improve market position, firms have to advance with times by executing all kinds of strategies, one of which is acquisition. “An acquisition resembles more of an arm’s-length deal, with one firm purchasing the assets or shares of another, and with the acquired firm’s shareholders ceasing to be owners of that firm” (Sudarsanam, 2003). Serving as an important capital restructuring tool, acquisition offers firms a conceivable opportunity for development by taking over another firm economically and legally. This essay aims to demonstrate that initially firms can achieve growth by the means of the acquisition of another firm, but the long-term effect of acquisition appears to be a

This brings me to the importance of acquisitions in Businesses. Acquisitions done at the right time can turn around the fortunes of any enterprise. For Example, Founded in 1911, the rapidly growing Swedish pharmaceutical company Pharmacia, showcased its first demonstration of market power with the purchase American rivals Upjohn in 1995 and Monsanto less than five years later. During that time Monsanto, had been developing the anti-inflammatory drug known as “Celecoxib”, which had been eyed by Pfizer during its development stages. Beaten to the punch by Pharmacia, the American Pfizer announced the purchasing deal of Pharmacia as a whole in July 2002 with the transaction tag of $60bn (U.S). Less than seven years later Pfizer would agree to purchase rival Wyeth for approximately $68bn (U.S). Today, Pfizer Inc. is worth as much as twice its value at $172bn (U.S). Taking another example, at one point Bank One Corp was the sixth largest bank in U.S.It was the first of many dominions that would be purchased by the millennials new born that is J.P Morgan Chase. After a string of successful mergers on its own, including its own consolidation of Chicago Corp and the National Bank of Detroit, Bank One’s buying

Mergers and acquisitions are practically formed when two or more companies agree to form a new firm or corporation. However, the circumstances surrounding the formation of a merger or an acquisition are what differentiate the two. In mergers, companies are engaged in negotiations to become one while in acquisitions companies do not need to hold prior negotiations since the acquirer buys the shares of the target. Further, acquisitions involve the acquirer wholly absorbing the target company and may be hostile or friendly.