Mercury Athletic Footwear : Back Ground

1875 Words Dec 17th, 2015 8 Pages
Mercury Athletic Footwear
Back Ground
West Coast Fashions, Inc. a large business of men’s and women’s apparel decided to dispose of one of their segments; Mercury Athletic. John Liedtke, head of the business development for Active Gear, Inc. saw it has a possible opportunity for them to acquire it. The footwear industry is very competitive, with low growth and stable profit margins. AGI is very profitable but it is smaller than its competitors, which is becoming a disadvantage. Therefore, Liedtke believes that if they takeover Mercury will double AGI’s revenue, increase its leverage with contract manufactures and expand its presence with key retailers and distributions. Liedtke is evaluating the company in order to find out whether the future benefits justify or surpass the present value of the investment in Mercury.

Analysis:
Liedtke, to get a clear picture of the acquisition of Mercury, needs to compare and analyze a list of financial data from 2006 to 2011; projected balance sheet accounts, operating results and free cash flows, and cost of capital calculations. The given data will enable him to conduct a SWOT analysis of this acquisition.
Given below the summary of the operations of both AGI and Mercury Athletics’ actual operations based on the last year given 2006 before AGI plans of acquiring Mercury.
It displays revenue and the market advantage of each company. The revenues are comparable, and through the acquisition, they will have more leverage with producers.…

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