Merger, Acquisition, and International Strategies 1

Merger, Acquisition, and International Strategies
Sharia Hendeson
Professor Rebecca Letellier
Business 499
December 2, 2012

Merger, Acquisition, and International Strategies 2 Bank of America and NationsBank
The renamed to Bank of America combined assets of $570 billion. To protect against perceived to be monopoly dangers, federal regulators wanted 13 branches divested in New Mexico, and the towns. The towns left with just one bank when the merger was complete. Bank of America becomes the largest bank holding company in America, and the second largest bank when ranked by market capitalization. Their 2008 acquisition of Merril-Lynch also solidified Bank of America as a serious force in investment banking.
The merger provides much revenue potential combined with no earnings and low to shareholders, establishes a company that will have $570 billion in assets, $45 billion in shareholders' equity and a market capitalization of $133 billion. The merger expected to close in the fourth quarter of 1998; the company had relationships with 29 million households in 22 states across the nation and served two million businesses in the United States and 38 other countries. Its 180,000 people will live, work and participate in thousands of communities across the country. http://www2.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/01-23-1999/0000852424&EDATE
Merger, Acquisition, and International Strategies 3 Boards of directors of both corporations, created a new holding company called BankAmerica Corporation, approved the merger agreement. The agreement provides for BankAmerica shareholders to exchange each of their shares for 1.1316 shares of the new BankAmerica Corporation. NationsBank shareholders will retain their existing shares, which will automatically become shares of the new company. All of BankAmerica's series of preferred stock exchanged are for preferred stock of the new company with the same terms and conditions.
In 1996, the company announced the $9.6 billion acquisition of St. Louis, Missouri-based Boatmen's Bancshares Inc. McColl commented on the purchase in a 1997 St. Louis Business Journal article, claiming, "it brings NationsBank into contact with 100 million Americans, 40 percent of the population. The company was doing so well then. Bank of America turned its efforts to independent growth, which had taken a back seat to deal-making activity for years. http://www.answers.com/topic/bank-of-america-corporation#ixzz2Dqn7PWFY http://www.answers.com/topic/bank-of-america-corporation#ixzz2DqnUbeWh

Merger, Acquisition, and International Strategies 4 A corporation that has not been involved in a merger is U.S Airways. They would merge well with British Air. Although the company has talked of merging, they are still considering it. A merged airline would have complementary route networks and achieve the scale necessary to compete head-to-head with the largest carriers, US Airways officials have said. Parker and independent analysts have said an American-US Airways combination would allow the airlines to compete with the two largest U.S. carriers, United Continental Holdings, parent of United Airlines, and Delta Air Lines. Those airlines in recent years have grown bigger by their own mergers. Combining our networks will allow American Airlines to grow and compete with our industry's dominant global carriers." http://articles.chicagotribune.com/2012-08-31/news/chi-american-us-airways-say-they-are-evaluating-potential-merger-20120831_1_merger-talks-ceo-tom-horton-american-airlines
Bank of America continues to expand its international investment banking business, where Mr. Moynihan said its global investment banking chief, Tom Montag, has hired 800 new employees overseas within the past year. Currently, 75 percent of Bank of America’s investment banking revenues earned domestically and it is the second largest investment bank globally. Bank of America plans to use this franchise to serve three different customer groups: consumers, businesses and institutional investors. The company believes that this customer focus will lead to higher revenues in the end, as it will help to retain customers.Bank of America found that its attrition rate for retail customers that have two or more products with the bank averages only 1%. This compares to a 12.5% attrition rate for retail customers with only one product with the bank.
Merger, Acquisition, and International Strategies 5
Citigroup had 44% of its managed revenues from what the bank considers emerging markets. Its brand distribution network and multiple product lines will help differentiate the bank from its competitors. http://www.investopedia.com/stock-analysis/2011/bank-of-america-sets-strategy--bac-jpm-wfc0314.aspx#ixzz2Dx52Y9fO
A business level strategy considered in the company being able to use some of its capabilities and core competitiveness that are developed in the domestic market as the foundation for success in international markets Having an international strategy allows for the foundation of competitive success internationally, having the labor, land, natural resources, capital, and infrastructure. Having the right resources will help the transition to success in the international market. The size and the nature of US airways have the advantage of the need within the company’s demands for scale efficient facilities. The company has to make sure the company supports them internationally, which the British airways do. Having a national advantage allows beneficial outcome. Corporate level strategy has are global strategies, transnational strategy and multidomestic strategy. Focusing on the firm’s operation develop geographical diversification. Since, they already have companies that they are considering merging. Parker and independent analysts have said an American-US Airways combination would allow the airlines to compete with the two largest U.S. carriers, United Continental Holdings, parent of United Airlines, and Delta Air Lines. Those airlines in recent years have grown bigger by their own mergers. The need for the firm’s local responsiveness is high, so the global integration should be high. Having a global strategy allows the firms to know each region and having to apply them in each market. The transitional strategy allows global efficiency and local responsiveness (Hitt pg. 231-235 2013).
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References

Bank of America Sets Strategy. 2011 March 14.
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2013). Strategic management: Concepts and cases:Competiveness and globalization (10th ed.). Mason, OH: South-Western Cengage Learning.
Moynihan Outlines Bank of America Strategy. (2012) Chicogo Tribune News Karp, Gregory
The New York Times Company. (2012) Moynihan Outlines Bank of America Strategy