Stonewall Ind Essay

1260 Words Oct 25th, 2015 6 Pages
Question 1:
In 2008 British Wallboard, the parent company of Stonewall has seen enough of the volatility in the Canadian construction materials market and sells the company to a competitor, US Corp. Its subsidiary, Canadian Wallboard, and Stonewall will merge into one organization. What are the benefits of the merger to British Wallboard? US Corp? Canadian Wallboard? Stonewall? (10 marks)
The benefits of the merger to British Wallboard:
Financial Benefits:
The benefit to British Wallboard of the sale and subsequent merger is not having losses from poor market conditions for Stonewall Industries.
British Wallboard may recognize some tax benefits from the sale of Stonewall Industries.
The benefits of the merger to US Corp:
Strategic
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As Canadian Wallboard is assumed to only operate in Canada similar to Stonewall Industries there is no benefit to opening in new markets internationally, or corporate venturing.
Becoming a larger more efficient company with a strengthening competitive position opens up the opportunity for more mergers and acquisitions of competitors, suppliers and/or customers.
Financial Benefits: The most obvious benefits is gained by economies of scale, reduced headcount, factories, and/or branches. There may be some tax advantages from the merger with Stonewall Industries.
The benefits of the merger to Stonewall Industries:
Strategic Benefits:
Stonewall Industries will benefit from the merger strategically by leveraging current customers of Canadian Wallboard.
As Stonewall Industries only operate in Canada there is no benefit to opening in new markets internationally, or corporate venturing.
Becoming a larger more efficient company with a strengthening competitive position opens up the opportunity for more mergers and acquisitions of competitors, suppliers and/or customers.
Financial Benefits: The most obvious benefits is gained by economies of scale, reduced headcount, factories, and/or branches. There may be some tax advantages from the merger with Canadian Wallboard.

Question 2:
What are the risks to each of the four companies of this merger?

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