Monmouth Case Study

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Monmouth, Inc. - Case Study - Strategy 1) Describe briefly Robertson’s business and the key factors to succeed in it. How well is Robertson doing from an operational standpoint? What KPIs should one consider? Robertson is one of the largest domestic manufacturers of cutting & edge hand tools and a leader in its two main product areas: * Clamps and vises: the company holds a 50% share of a market estimated at $75-million, with a reputation for high-quality and a very strong brand name * Scissors and shears: the company holds a 9% share of a market estimated at $200-million, with an equally high reputation for quality From an operational perspective, the annual sales growth of 2% is behind the industry average of 6% per year, and…show more content…
NDP stands to lose a very good deal; an all stock deal between the depressed stock of NDP and the Robertson shares, which are trading near the industry average P/E, will be highly accretive for the buyer; while unusual for a buyer, it is quite possible that the recent upsurge in NDP stock was due to arbitrageurs trying to gain from an impending deal. If so, this would provide additional incentive to NDP to close the deal, in order to avoid the price drop caused by the closing of speculative positions. Simmons has already lost the battle for Robertson; it is now trying to exit with as much a profit as possible under the circumstances; the prospect of receiving inflated NDP stock poses a double risk, of poor performance and of illiquidity. Robertson itself, once it has accepted that it is going to be purchased, actually stands a lot to gain from a potential bidding war; with the hostile raider out of the way, it can ask for a significant premium for cooperation. 9) Decision time! Based on these and possibly other considerations, should Monmouth bid for Robertson? If yes, what level and terms do you suggest? (10 lines max). If structured appropriately, the deal can improve Monmouth’s growth prospects significantly; the potential synergies and distribution channels make it worthwhile even at significant premiums over the market share price. However, on an all-stock
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