1. Havells’ proposed acquisition of Sylvania Limited Inc. (SLI) makes sense from a strategic point of view. Macroeconomic conditions and an increasing threat of competition give merit as to why this proposed acquisition makes strategic sense. The electrical and lighting industry is poised for a major growth spurt (page 3), and this could pan out to be a lucrative time for companies such as Havells to begin investing in both these segments. Havells has become a dominant player in the switchgear market (page 4), and it has smaller positions in the cable and wire (C&W) and electrical consumer durables (ECD) industries, both of which faced stiff competition. Even though, Havells has a good footing in their Indian domestic market, …show more content…
These 10 factors are the top 5 advantages and top 5 disadvantages in the deal.
Using this framework, as shown in the appendix, I have determined the likelihood of success in this acquisition is 45%. One of the major success factors was the cross-segment benefit that arises, such as leverage bundling deals and SLI’s wide marketing network. A major success factor is the geographic diversity that this acquisition provides, which allows Havells to move into other regions. One of the major failure factors is the management differences due to one company being family run and more aggressive and entrepreneurial while the other company, which is non-family run, is mature and conservative in nature. A major failure factor is the huge financial risks that have to be taken ($200 million) to finance the acquisition of SLI by Havells. If Havells cannot pay back the lenders, management may have to break up and sell its parts. As an advisor, I recommend proceeding with this acquisition as its success factors outweigh its failures. Even with a 45% chance of success, these risks can be managed and challenges can be dealt with, these opportunities to expand operations are not abundant. Appendix
Success Framework Advantages | Score | Cross-segment benefit | +9 | Geographic diversity | +10 | Product diversity | +8 | Vision alignment | +7 | R&D Synergy | +4 | Total Advantages | 38 | Cultural differences | -4 | Management
• Analysis of the target company—is the company a strategic fit as far as size, geographic location, business mix, operational capacity, financial strength and availability for takeover.
For the corporation that has acquired another company, merged with another company, or been acquired by another company, evaluate the strategy that led to the merger or acquisition to determine whether or not this merger or acquisition was a wise choice. Justify your opinion.
The acquisition would provide not only geographic expansion but would also expand LM’s sphere of service offerings. LM is a leader in innovation and quality service while NSI has experienced management and a good reputation. This would allow LM to solidify its position as a market
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.
Mergers and acquisitions have become a growing trend for companies to inorganically grow a business within its particular industry. There are many goals that companies may be looking to achieve by doing this, but the main reason is to guarantee long-term and profitable growth for their business. Companies have to keep up with a rapidly increasing global market and increased competition. With the struggle for competitive advantage becoming stronger and stronger, it is almost essential to achieve these mergers. Through research I will attempt to dissect the best practices for achieving merger success.
A merger is a partial or total combination of two separate business firms and forming of a new one. There are predominantly two kinds of mergers: partial and complete. Partial merger usually involves the combination of joint ventures and inter-corporate stock purchases. Complete mergers are results in blending of identities and the creation of a single succeeding firm. (Hicks, 2012, p 491). Mergers in the healthcare sector, particularly horizontal hospital mergers wherein two or more hospitals merge into a single corporation, are increasing both in frequency and importance. (Gaughan, 2002). This paper is an attempt to study the impact of the merger of two competing healthcare organization and will also attempt to propose appropriate
Dorchester, Inc is a U.S based conglomerate and has the intentions of expanding its operation to international levels. Recently there has been a trend by its competitors to expand their operations internationally as well. This is the prompter to the decision by the management of Dorchester, Inc to follow their competitors' trend and venture into the new and emerging markets globally as a long term business strategy. Through this international expansion Dorchester, Inc. hopes to gain a competitive advantage over its competitors. The particular area of expansion targeted by Dorchester, Inc is consumer electronics. The conglomerate has indicated their interest in purchasing companies that specialize in consumer electronics in three countries that identified herein (Prodi, 2010).
* For the corporation that has acquired another company, merged with another company, or been acquired by another company, evaluate the strategy that led to the merger or acquisition to determine whether or not this merger or acquisition was a wise choice. Justify your opinion.
It serves as a reference to co-researchers who will conduct research with relation to the topics in the study.
Question 1 Several factors have been proposed as providing a rationale for mergers. Among the more prominent ones are (1) tax considerations, (2) diversification, (3)
What are the major deal risks inherent in this merger transaction? How and to whom does the merger agreement allocate these key risks? (See, in particular, case exhibit 4.)
Flinder feared that without a stronger partner, the company would be crush by competition. He was attracted by the thing that FVC’s company might be more fully valued if it were a part of a larger and more diversified enterprise. Thus, when the merger opportunity with RSE corporate in 2007, Flinder determined to make it work as best as he could. In addition, Flinder expected the merger to generate significant cost gains. RSE’s greater purchasing power would lower the cost of materials and components for FVC. RSE’s new resourcemanagement system could be expected to reduce FVC’s in-process costs. Flinder hoped that RSE would recognize the fair value of his company. 2. How large a premium do you thing RSE International will have to offer ? What should their opening offer be ? And should they be willing to increase the bid if the opening offer is rejected? Keep in mind that RSE us apparently not sitting on a large “war chest” of cash . and in order to make a cash offer will probably have to take out a bank loan.
According to experts, IT is labeled as the “root cause” for many merger failures due to lack of integration, failure of due diligence and the inability to facilitate synergies (“IT M&A”, n.d.). With eighty
A wise man once stated that “ We don't grow when things are easy, we grow when we face challenges.” We the Deebilder Hardware Corporation are now facing a huge dilemma, House Depot Inc, ( HDI) a bigger competitor has entered the market in our upstate region of New York. HDI has on average 4,000 stores around North America and giving reports states they’re spreading quickly. Their economies of scale makes it for them to buy out their competitors and truthfully they have the ability to underprice our company and any other competitor in the region. Given our current situation HDI has pitched us an offer. They suggested to buy our entire corporation for $40 million in cash and 1 million shares of their HDI stock which are valued at today's market at $30 per share. HDI has made their offer clear and stand firm in giving us the offer to sell, but we only have till midnight to consider this
Overall, the proposed acquisitions yield the company a combined entity with much better performance in term of profitability such as: