The Merger And Acquisition Is Considering Acquiring And Merging With Rizzi, Alonge, And Geroux

This paper will be my prospectus on the justification of the allocation and potential earnings in each class.

According to the researchers the increased value results from an opportunity to utilize a specialized resources which arises solely as a result of the merger (Jensens & Ruback, 1983; Bradle, Desai and Kim , 1983). For creating operational and financial synergies managers believe that two enterprises will be worth more if merged than if operates as two separate entities. Thus, the two companies, A and B:

A merger offer would raise the stock prices of Massey-Ferguson, if the deal is perceived as synergic for the company in the long run, and would infuse financial resources and flexibility into the company in the short term. In the light of Massey-Ferguson’s negative performance, however, a merger offer from any company seems highly unlikely due to

Merging with another organization has downfalls of destroying wealth from the merger. Considering the buying price is important when merging, spending too much on the merger will impound the value after the merger. Some mergers do not create wealth so capital is lost through the merger. There is no guarantee of financial gain and every formula considered with focus, just as with an acquisition. The final decision dictated by the variables. One company merging with another company takes the debt and losses of those companies in the new formed company.

The first topic that I’m going to discuss is regulation A with all the assets and what it is useful for. Regulation A is the regulation that introduced by the Securities act, and what regulation a does is it will make you have an exemption from registration requirements. This regulation applies to public offerings of securities that do not exceed five million dollars in any one-year period. So, when we break regulation A down, it is really is making up for all of the strict documentation that goes into investments. This regulation also provides a more efficient way for financial statements, without having to worry about going through an audit.

* 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.

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)

4-8 Explain how the rules concerning stock ownership apply to partners and professional staff. Give an example of when stock ownership would be prohibited for each.

The merger is a qualifying reorganization. It is a forward triangular merger, §368(a)(2)(D), because the parent (ODI) created a subsidiary (Atlantic) with the contribution of its stock (the ODI Nonvoting Preferred Stock), and then the target (CPI) merges into the subsidiary (Atlantic). CPI’s shareholders will receive the nonvoting preferred stock of ODI, and CPI will disappear. The requirements necessary under §368(a)(2)(D) is that the subsidiary acquires substantially all of the target’s assets, which will be 90% of net and 70% of gross. This does occur because Atlantic acquires all of CPI’s assets and liabilities. Typically, stripping off a target’s assets are prohibited, but in this case the subsidiary is acquiring the cash received from the sale of the tools division. Another requirement is that the target’s shareholders only receive stock of the parent and not the subsidiary, and in this case, the stock transferred to CPI’s shareholders are all ODI’s stock. Another requirement is that the target is merged into the subsidiary, which does occur; CPI merges into Atlantic and Atlantic survives. The final requirements are the judicial authority requirements. There is a continuity of shareholder’s interest test, just like required in a type “A” merger. Even though not all three shareholders of CPI receive shares of ODI, Harry’s and Teresa’s ownership is greater than 50% of CPI. Harry owns 60% (300/500) of CPI and Teresa owns 22% (110/500) of CPI. It also meets the

Synergy are extra benefits connected with economies of scale after mergers or acquisitions. It’s seen as the formation of a whole which is usually more than the sum of its individual portions. Through combination of General Mills and Pillsbury, the company gains market power since it gets sufficient power to increase its profits though price leadership, competitive advantage, monopolistic or oligopolistic. The management motive of acquiring Pillsbury was to increase value to the General Mills shareholders through creating opportunities to increase on revenues and earnings by market expansion, product differentiation and invention and efficiency achievements resultant from the merger would be extra stable.

Abernethy and Chapman are desirable because they have a steady clientele and continue to generate revenues leaving them with a net income that is favorable. Often companies will merge with another company in an effort to avoid bankruptcy, consolidate services, or expand. Over the years, we’ve seen many big-name firms merge with others. Acquisitions and mergers are becoming a trend due to the number of partner retirements and the lack of succession plans. (Sinkin and Putney, 2013) Firms such as Abernethy and Chapman might agree to an acquisition because it is often the most cost-effective way for them to increase cash flow and continue to be successful. Mergers can either be a success or a failure. When you merge organizations, you are also merging personalities which can often lead to conflict; however, merging the different levels of expertise could be beneficial to a firm. Ultimately, I believe that merging firms will create

9. How should Redstone proceed? What price should he offer? Should the offer be a cash offer, a stock offer, or

4- I believe that Henry Morgan support one of the acquisition offers because as his statute in the corporation indicates as a member of the board of directors, one of his main objective on the company is to show interests of shareholders. However, shareholders under the current management are not receiving good returns since the stock price is fixed around 21$ per share for several years. In addition if takeover occur the price will increase, which is beneficial to stockholders. Regarding Henry Morgan only two offers are favorable for him which are Dreyer’s Grand and Unilever offers because they will keep the present management team which include Henry Morgan, otherwise, if they choose Meadowbrook or Chartwell Henry will be fired as they will install a new management team.

above, how much should CSX be willing to pay for Conrail? Support your answer with appropriate analysis. According to operating income gains we can value a firm’s market price as its pre-merger value and the present value of gains in operating income. Let’s assume that value of Conrail before the merger is equal to its market cap. Then taking Conrail share price as $71.94 (average of year end and high stock price) and number of shares outstanding as 90.5 million shares (Exhibit 6) we get Conrail market value equal to $6,510.57 million ($71.94 x 90.5 million). We assume G =3%, MRP = 7%. We take risk free as 30-year maturity US Bonds rate, which is 6.83% (Exhibit 8); merged CSX-Conrail equity beta as average of CSX and Conrail equity betas, which is 1.33. rE = rf + MRP βE = 6.83% + 7% x 1.33 = 16.11% Now we can find Conrail’s synergy value as present value of gains in operating income. 1997 Total Gain in Operating Income Total Gain in OI after 40% Tax Gain in OI (discounted @ rE) $ $ $ 1998 $ 88 $ 12.80 $ 7.15 $ $ $ 1999 396 237.60 176.26 $ $ $ 2000 550 330.00 210.84 2001 $ 567 $ 340.20 $ 187.21

As we can see on attached charts - Market was not too sure about this merger (“On paper, the deal has much to commend it, many outsiders say”. But thorny issues remain, including how to accommodate the strains between consultants and auditors, potential conflicts of interest involving important clients and even the delicate matter of choosing a new name. If the negotiators are not careful, fallout could haunt the combined firm for years to come.) From the time when merger plans were made public Shares of