Bombardier Adtranz

1765 WordsNov 6, 20058 Pages
Case BOMBARDIER /ADTRANZ Question 1 Two very important reasons for an acquisition are: 1 Possibility to expand internationally; 2 The potential to transform a company and to enrich a firm. What is the Why Rationale? With the cross border acquisition of Adtranz by Bombardier Inc. (BBD) it enabled Bombardier Transportation (BT) - a division of BBD - to enter the local European markets, obtain know-how and access to European engineering concepts needed in emerging markets like Asia and South America and other markets or influential groups demanding European equipment and technology. Apart from this, it would clearly strengthen BT¡¦s global reach. With this acquisition it wanted to balance revenue streams in the different groups…show more content…
„« Big growth potential due to acceptance of European standard as international standard in Asia and South America „« Big upside potential due to more privatisation „« Direct increase in cash flow due to nature of the business (advance payments etc.) „« Quick gains due to better and more streamlined control (>20% decrease in cost) „« Interesting acquisition price: due to the fact that DaimlerChrysler needed to quickly unload non core assets, BBD was able to acquire against low cost Arguments against the merger „« Different organisational structures: both organisations were incomparable „« Difference in reporting allocation of responsibilities „« Different growth strategy „« Adtranz is as a company not in poor shape, as previously acquired companies, so this is not a comparable scenario as BBD was used to in the past „« As BT becomes rather large, BBD might be at risk as the business is contra-cyclical and thus vulnerable for external uncontrollable influences „« Limited potential in synergy as individual requirements by nationals make standardisation very difficult; this however is something BBD has been looking for in previous acquisitions „« Protectionism by national governments can limit accessibility of the markets „« Risk that the deal will not be approved by EC regulating bodies (government interference) „« Major cross cultural differences (no organisational and cultural fit) „« Limited scope of clear objectives „«
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