Brief overview Just like Harris Corporation, Exelis Inc. is mainly in business as a defense contractor for U.S Government. It manufactures high tech weaponry such as integrated electronic warfare, sensing and surveillance, air traffic management, information and cyber security, and networked communications. Exelis also provides aerostructures, logistics, and technical services. Even though U.S government is the main customer, Exelis also serves commercial clients, with international customers comprising about 10% of sales. Reasons for acquisition: U.S defense budget had peaked in 2010, and since then it has been gradually declining. Since U.S government defence agencies are the main customer for Harris Corp and Exelis Inc., there are not many opportunities for organic growth. The acquisition will bring consolidation among mid-size defense companies …show more content…
Harris corp had lost contract obligations with U.S Navy and Air Force, at the same time, Exelis has gain few department of defence business. The acquisition will help Harris Corp. to gain back the business lost from U.S department of defence. Both companies lack certain capabilities, and the merger will help them to improve areas where each company is lacking behind. Another reason why Exelis is the best choice is because it sells equipment to NASA, whereas, Harris has minimum presence in NASA. NASA is Exelis's fourth largest federal customer. Big portion of defense agencies budget goes towards payment of personnel working for it. But for NASA, most of the budget is spend on purchase of equipment. Through Exelis, Harris corp. Can better exploit this market. Harris estimates that the merger will create synergies by cutting costs in a range of $100 million to $120 million. Most of the savings are expected from merging headquarters and eliminating public company costs and from operational and functional
In conclusion, it is quite clear that the only way these two companies would be successful in a merger, would be through common goals. Apparently, the main goal of the two corporations was employee happiness and a sense of peace. The leaders of the corporations were the ones responsible for the sharp and considerate decisions to create the positive outcome.
When information is shared between the two companies it makes the whole organization better. Utilizing programs to show how effectively the company is operating can help show areas of concern. These can be accessed and addressed in a timely fashion . Because each side would like for the company to thrive, they work together . During this merger roles of the employees / department should be clearly defined . As with anything the lack if knowledge or understanding is what cause failure. As I have started before knowing when employees are aware of their roles and how to do them effectively thing run much more smoothly and are done to standard. (work by rote) .when the employee fails to understand the organization Does as well . While it s the employees job to stay well informed it is also up to management that these things be made clear. During a merger the by learning different ways of comp,eying task employees learn and management s able to vine up with new techniques.
I think there will be no market concentration occurred as a result of this merger/acquisition. Because due to this acquisition the monopoly of the other giant company in this business will be reduced. This will lead to increase the price competition.
By merging we can lower costs by sharing assets and combining forces to reduce operating costs.
First, we calculate the operating value during 2008 and 2012 using APV. The cash flows of these five years combine the stand-alone cash flows and the synergy cash flows. We assume depreciation/capital expenditure equals 1. First of all, we calculate the NPV. The potential synergies come from system operating cost saving as well as the increase in revenue and gross profit. We use the unlevered (=0.96) and get the cost of equity (=10.2%). We get the synergies cash flow using Jenifer’s projection about synergies. We use the cost of equity (=10.2%) to discount the cash flows and get NPV from 2008 and 2012, which is $1,511.39m. (Exhibit 5)
Financial considerations and concerns involving mergers and acquisitions: mergers and acquisitions possibly may require careful analysis of merging organizations’ potential complex financial differences. This might include financial strengths and weaknesses of each organization entering into merged partnership. Further, potential and likely outcomes with respect to financial benefits and negative consequences one organization may have in a formed partnership. Thus, solid strategic financial analysis and planning prior to the actuation of merging organizations is wise to determine beforehand to mitigate potential negative consequences while maximizing potential resulting during and following formation of
To be able to recognize the cost synergies, Dow had to incur a one time cost of $1.3 billion spread over two years. Dow also stated that it would take 2 years for them to fully recoginize the cost synergies. We found that $800 million of cost synergies would be worth and additional $32.18 per Rohm and Haas share.
13). Halliburton announced in 2014 a consolidation with Baker Hughes, another competitor in their industry (Halliburton And Baker Hughes Reach Agreement to Combine in Stock and Cash Transaction Valued at $34.6 Billion. p. 1). With this consolidation, Halliburton will acquire all assets of Baker Hughes, along with the future subsidiary’s debts. With the uncertainty of the lifetime of the oil industry, and currently facing a significant loss, Halliburton is taking a serious risk facing such a large amount of debt and acquiring Baker Hughes.
According to Global Edge, the aerospace and defense (A&D) industry is highly concentrated, which means that the industry’s direction and price points are largely shaped and controlled by a small amount of large firms in the industry (Global Edge, n. d.). The top five A&D contractors based on their 2015 revenues are Lockheed Martin, Boeing, Raytheon, General Dynamics, and Northrop Grumman (Choi, 2016).
The year, 2015, has seen a resurgence in cross-regional mergers and acquisitions (Cross-Regional, 2015). Cross-regional mergers and acquisitions are on track for activity to increase by 18% year-over-year (Cross-Regional, 2015). Cross-regional mergers and acquisitions could reach $733B if current momentum continues; this would represent 23% of all merger and acquisitions activity across the globe (Cross-Regional,
The Baker & McKenzie report predicts the technology sector to drive M&A deals. According to their data, the sector’s deals could reach $415 billion by next year, which would be the highest level since 2000. Michael J. Grossman from RSM US LLP has also pointed out to the strength in the technology sector’s growth – especially in terms of cross-sector deals. Fintech and technology in the automotive sector have had a strong year.
Companies should keep in mind that after the merge there will be some synergy between companies and there will be growth for the after the merger because of the companies will continue to work. Also the market power will increase and the big company after the merger will have easy access to resources. There are also some cross-border advantages for mergers too.
Much has been learned from thirty years of mergers. While all mergers set out with the intention of generating value, technology must include an innovation and quality element. The
Is one of EMS’s (electronic manufacturing services) that despite the direction in market and competition is focused in its core competence that is circuit
To achieve the source contacts the company has started mergers and acquisitions. Whereas not only for the contract even to meet the price, quality and global standards.