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Mercury Athletic

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MGMT S-2720
Assignment 1: Mercury Athletic Footwear

Questions:
1. Is Mercury an appropriate target for AGI? Why or why not?
2. Review the projections by Liedtke. Are they appropriate? How would you recommend modifying them?
3. Estimate the value of Mercury using a discounted cash flow approach and Liedtke’s base case projections.
4. Do you regard the value you obtained as conservative or aggressive? Why?
5. How would you analyze possible synergies or other sources of value not reflected in Liedtke’s base assumption?

1. Is Mercury an appropriate target for AGI? Why or why not?
Yes, we believe Mercury is an appropriate M&A target for AGI and should be pursued.

The Footwear Industry is a competitive business. We can …show more content…

Mercury’s parent company then branched out to complementary line of apparel products. With poor performance, Mercury is being sold off.
• Mercury does not discriminate its sales channels. It is sold in department stores, specialty retailers, wholesalers and independent distributors. A small percentage is sold through website and other sources
• Mercury manufacturers the footwear in China.

Possible synergies from the acquisition of Mercury:
• Increase in sales by using the same sales channels, offering more styles, and increase presence in new markets for AGI products.
• Increase production efficiency by consolidation in manufacturing facilities. With a higher production volume, the new AGI might be able to negotiate for lower cost from different suppliers and manufacturers.
• Increase in logistics efficiency. The combined company would be able to combined the logistics for both company, decreasing overhead and possibly offer more efficient distribution and logistic support.
• AGI has a higher profitability margin, and can thus potentially increase Mercury’s financial performance.
• AGI and Mercury’s respective brands target different customers markets. The combined company would have opportunities to gain new customer segments to the combined products.

2. Review the projections by Liedtke. Are they appropriate? How would you recommend modifying

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