Synergy

Cost Synergies: How Merger Models Incorporate Managerial Accounting Methodologies Introduction According to the Merriam-Webster online dictionary, a synergy is defined as “a mutually advantageous conjunction or compatibility of distinct business participants or elements (as resources or efforts)”. When applied exclusively in a business context, synergies are realized improvements in efficiency, as well as reductions in cost, resulting from the cooperation of two or more entities. These improvements

is currently at $46.77 while the synergies could almost double that to $94.63 per share. By going ahead with the deal Dow would need to raise capital and that might lead to a lower bond rating. 1. Why does Dow want to buy Rohm and Haas? Dow believes the acquisition of Rohm and Haas would be

Recommendations: 4 Value of synergies and intrinsic value per share of Antarctica 5 Form of payment; Cash or common stock? 5 Share-for-share transaction 7 Term sheet and its components 8 Economic Analysis 8 Recommendation 9 Executive Summary In 1999, the CEO of Companhia Cervejaria Brahama (largest brewer in Brazil) was considering the bit for Antarctica (second largest brewer in Brazil). The purpose for this merger was to exploit the potential synergies and avail the economies of scale

(WACC=8.5%, growth rate=2%), we arrive at a base equity level without synergies of $46.41 per share. However, this value is quite sensitive to both the WACC and growth rates. The overall spectrum of base values ranges from $27.75/share to $73.42/share, with the baseline assumptions falling squarely in the middle. Table 4: Per-Share Equity Value without Syergies Value of the Cost Synergies To be able to recognize the cost synergies, Dow had to incur a one time cost of $1.3 billion spread over two

Q1. What is the approximate, net of tax, present value of the cost savings synergies created by the deal if the relevant cost of capital (discount rate) is 7%? A1. Given: Cost of Capital = 7% Assumption: Tax rate (US Corporate Tax Rate) = 33% Year 2007 2008 2009 2010 Terminal Annual Cost Saving ($ Mio) 105 350 595 700 10000 One Time Charge ($ Mio) 692 337 61 0 0 Net Cost Saving ($ Mio) -587 13 534 700 10000 Tax Rate 33% 33% 33% 33% 33% After Tax Cost Saving ($ Mio) -393.29 8.71 357.78 469 6700

the care they deliver. One of the systematic approaches used today is the Synergy Model. The synergy model is an assumption that if executed correctly will result in optimal patient outcomes. The purpose of the Synergy model was to link clinical practice with patient outcomes. Patient characteristics and nurse competencies are joined resulting in optimal patient outcomes. The three outcomes that are involved in the synergy of the model are patient outcomes, nurse outcomes, and

Disney has expanded in both vertical and horizontal dimensions. They have 5 main business categories, notably media networks, studio entertainment, theme parks and resorts, consumer products, and internet and direct marketing. Vertical Integration The adaptation of both upstream and downstream vertical integration has allowed Disney to have greater control over their value chain system. It has allowed Disney to maximise their profits to earn from every aspect of a movie from its production, marketing

mergers are organizational strategies that are implemented to achieve three types of synergies, namely financial synergy, operational synergy and managerial synergy. Generally, the acquirer firm will have considered the target’s capable assets and resources and presume that they can be beneficial to its own development. The synergy concept reinforces this idea when it comes to mergers. For instance, the synergy concept argues that mergers allow the combining of the efficient parts of the companies

state that there are four common reasons of unsuccessful acquisition. It is over expected of synergy, different company culture, lose regular clients and politics. 2.1 High Expectations of Synergy When considering the commonest reasons for loss of profit, shrinking of companies and failed acquisitions, one of the reasons that cannot be ignored is the over expectations the acquiring firm was of synergy. Synergy can be defined as the “extra energy or effective that people or businesses create when they

When we talk about acquisitions or takeovers, we are talking about a number of different transactions. These transactions can range from one firm merging with another firm to create a new firm to managers of a firm acquiring the firm from its stockholders and creating a private firm. We begin this section by looking at the different forms taken by takeovers. 1. TAKEOVER A corporate action where an acquiring company makes a bid for an acquire. If the target company is publicly traded, the acquiring