Cooper Industries Inc. Essay

5573 WordsApr 3, 201223 Pages
Cooper Industries Inc. Based on the given information in the case study regarding the acquisition of Nicholson File Company by Cooper Industries, there is no question that Cooper should try to gain control of Nicholson. This decision is based on an analysis of the bargaining positions of each group of Nicholson stockholders which have disparate goals and needs that need to be met. In addition, an appropriate payment method and specific dollar value based on a competitor's offer and Cooper financial data was decided. The remainder of this paper will provide the analysis and rationale for this determination. Should Cooper Industries Acquire Nicholson File Company?c Cooper Industries has been expanding through diversification since 1996.…show more content…
There were many reasons why Nicholson was a good acquisition target for Cooper. In accordance with the 3 criteria established in 1966 for Cooper’s all acquisitions, Cooper is already becoming a major factor in the handtool industry when it acquired the Lufkin Rule Company in which more companies were acquired. The Nicholson File Company is an attractive acquisition target as it meets all 3 criteria. The Nicholson did possess 3 important fundamentals not yet translated into earnings. They were the 50% market share leadership in the $50-million market for files and rasps, the third market leadership with a 9% market share in the hand saw and saw blade ($200-million market) and finally the distribution system which provided a market reach of 53,000 retail outlets in the US and Canada Is this essay helpful? Join OPPapers to read more and access more than 550,000 just like it! GET BETTER GRADES and an oversea sale representative force of 140 in 137 countries. Q2. Nicholson Valuation * DCF Analysis Assumptions: From the Cooper ownership, the followings will be achieved under Cooper’s analysis; 1. The Nicholson will be able to reduce the Cost of Goods Sold from 69% to 65% of Total Net Sales as efficiency in manufacturing and inventory can be achieved. 2. The Nicholson will be able to reduce the Selling, general and administrative expense from 22% to 19% of total net sales as elimination of sale and advertisement duplications could be

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