...Merger Integration: Delivering on the Promise A Series of Viewpoints on Mergers, Acquisitions, and Integration Executive Summary From airlines to automobiles to advertising, the urge to merge has escalated steadily over the past decade. In 2000 alone there were 9,472 merger and acquisition transactions in the United States — a new record. Although this rush to the altar may have been grounded in solid synergistic potential, all too many of these marriages quickly faltered. Booz •Allen & Hamilton recently conducted a study of deals that closed in 1997 and 1998 and discovered that 53 percent of the deals had failed to deliver their expected results. Although senior executives devote exhaustive hours to striking the right deal, it is merely the beginning of the long and tortuous merger integration process. In fact, structuring a deal is relatively easy; implementing one is nothing short of heroic. As an executive presiding over a newly merged company, you are inundated with competing priorities and demands. But the most important questions before you are these: • How do you deliver on the value you promised shareholders and investors while simultaneously “keeping the wheels on the business”? • In the wake of a merger, how do you successfully integrate operations while maintaining your focus on customers? Although no one-size-fits-all formula can apply to every company’s unique situation, in our experience four principles are the key to success in merger...
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...of developments and pricing fronts. The big players in the market often have greater access to more resources that allow them to combat the negative forces to a certain extent. However, smaller health care entities may find it difficult to fight against these situations and thus consolidation in the industry is seen as one of the ways for survival. Many health care service providers are taking on mergers and acquisitions in order to improve operational efficiency, patient care and lower their costs. Some of the reasons behind consolidation in the industry are: 1) seeking economies of scale, 2) drawing on a partner’s unique clinical or managerial strengths, 3) gaining geographic strength to better serve patient and community needs, 4) improved access to capital and 5) better leverage in payer negotiations. In 2011, there were 86 hospital merger and acquisition deals, up from 77 in 2010, and 107 physician group merger and acquisition deals, up from 67 in 2010, according to Irving Levin Associates, Inc. (Ellis and Razavi, 2012). There are many financial drivers to look for in a merger. Some are...
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...Contemporary Issues in Management Case study: Global Strategic Analysis Adidas and Reebok Merger Acquisition ABSTRACT 3 INTRODUCTION 4 LITERATURE REVIEW 5 ANALYSIS AND FINDINGS 8 VMOST 7 VISION 7 MISSION 7 OBJECTIVES 7 STRATEGIES 7 TACTICS 7 ACQUISITION 8 SWOT ANALYSIS 9 BEFORE ACQUISITION WITH REEBOK 9 STRENGTHS 9 WEAKNESSES 10 OPPURTUNITIES 10 THREATS 11 AFTER ACQUISITION WITH REEBOK 11 STRENGHTS 11 WEAKNESSES 11 OPPURTUNITIES 12 THREATS 12 CONCLUSION 13 REFERANCES 14-15 ABSTRACT The purpose of this report is to evaluate the impact of adidas pending acquisition of Reebok on the sporting goods industry in relationship to Nike position. Evaluation of background information and corporate culture combined with VMOST and SWOT analyses to helped form the arguments presented in this report and have assisted in answering the question, Will adidas forthcoming takeover of Reebok help the new company achieve sustainable competitive advantage over industry leader Nike?. This research was based on the subject that is illustrating an evaluation of the impact of Adidas from acquisition reebok. Furthermore, an investigation of the strengths, weaknesses, opportunities and threats (SWOT) related to companies in the sports industry was conducted. On the one hand it was found that Adidas historically grown...
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...并购并不成功。利用该评价体系，也可以看出国美对永乐和大中收购 最终带给企业的影响。 本文给予投资者判断企业并购绩效的新视角， 并且提出如何提高 并购绩效的建议，对于零售行业加速整合，规范市场行为有很好的借 鉴和参考价值。 关键词：零售业，并购，财务指标 The Financial Analysis of the Effect of Mergers and Acquisitions in Retailing of China Abstract China's retail industry started in the early 1990s, has experienced 20 years of vigorous development, and now begins to enter the period of mergers and acquisitions. From financial aspect, the main motive of M&A in retailing is to increase profits, or reduce costs. Therefore, M&A performance also depends on whether the organization can finally realize the optimization, financially and operationally. This paper selects the listed retail enterprises involved in M&A, transforms the data of the financial statements into financial indicators. In order to compare these indicators, this paper puts forward a new M&A performance evaluation system which can be used to compare financial index before and after the merger activity, so as to estimate the results. The result finds that most mergers in retailing is not successful as expected. Using the evaluation system, we can also have an insight into Gome acquisition events and those effects on the organization. This paper gives the investors a new perspective to assess M&A performance, and puts forward advice on how to improve the performance of mergers and acquisitions. It is very helpful for the integration of retail industry and the regulation of market behavior. Key words: retailing, M&A, financial...
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...Rule of Reason Approach—Critical analysis on the AAEC in respect of P & G Gillette Merger. --- By Bhanu Shree Jain In inquiring into a Merger and Acquisition the Competition Commission has to see whether a Merger and Acquisition has caused or likely to cause an “appreciable adverse effect on competition” (AAEC) and there is a ‘rule of reason’ approach to the inquiry. The paper explores Section 5, 6, 20, 29, 30 & 31 of the Competition Act, 2002 which govern the same and the act provides a large number of factors which the Commission must take in to account in the inquiry. Most importantly, these include the market share of the enterprises, barriers to entry, level of concentration in the market, likelihood of increase in prices of profits margins, removal of an important competitor, and so on. If the Commission finds, which going by historical experiences could be in a small proposition of the cases, that the merger is likely to have AAEC, the commission may refuse approval or may approve it with certain modifications. In case of P&G Gillette merger, the authorities stipulated that certain part of the business must be divested. The process of inquiry set out in the act provides full opportune to the merging enterprises to defend the merger and also to consider any modifications proposed by the Commission. It also provides an open opportunity to opposing parties to present their position to the Commission. Section 5 sets up the threshold limit in India as well...
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...Exxon Mobil Corporation Introduction Exxon Mobil Corporation is a multinational oil and gas company that is based inAmerica. It’s a descendant at of the Rockefellers standard oil company and it was formed in1999 from the merger of the Exxon and Mobil companies. It’s headquartered in Irving, Texas.The company is one of the world’s largest publicly traded companies and has been ranked thenumber one or number two for the last five years. By the end of the year 2007 the company’sreserves stood at 72 million oil equivalent barrels while its production rates were expected to lastfor more than 14 years (Hrebiniak & William, 1984). The company has 37 oil refineries in more than 21 countries constituting a combineddaily refinery of approximately 66.3 million barrels. Exxon Mobil is recognized as the world’slargest refineries and this title has been associated with the former standard oil since the incorporation in the 1870s. In addition to that the company is largest of the six recognized oil supermajors. Exxon Mobil owns hundreds of other similar subsidiaries including the imperial oillimited in Canada and the sea river maritime which is a petroleum shipping company.Functionally the company is organized into several global operating categories including the 2. 2upstream, down stream, chemical Exxon Mobil global services company, XTO and finally theimperial oil (Neil,1974). Many organizations experiences a lot of stresses as well as difficulty when it comes tocoping with change and lack...
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...share in mid-1995. The top 50 firms held just over 60 percent. Changes were occurring in the pharmaceutical industry in the 1990’s. With pharmaceutical benefit management (PBM) firms working to reduce costs, pharmaceutical firms held less power. PBMs sought to reduce the number of supplier firms by only purchasing from the largest firms and requiring doctors to prescribe drugs from approved lists called formularies. Many pharmaceutical firms saw mergers as a means of reducing costs and increasing market share. On August 20, 1995, two pharmaceutical companies by the names of Upjohn Company and Pharmacia AB announced that they were forming a “merger of equals.” Upjohn Company, incorporated in the U.S., and Pharmacia AB, incorporated in Sweden, would combine to form the ninth largest pharmaceutical company in the world. PHARMACEUTICAL INDUSTRY: PRE-MERGER The pharmaceutical industry at the time of the case was very attractive. The attractiveness of this industry can be determined using Porter’s Five Forces, a model for industry analysis. This model looks at barriers to entry, supplier power, threat of substitutes, and buyer power as they relate to industry rivalry. BARRIERS TO ENTRY The pharmaceutical industry has high barriers to entry. A company should expect to spend up to 15 years and up to $600 million to bring a new drug to market. On average, only one out of every 10,000 tested compounds becomes an approved drug. If a drug does make it to market, there is only a thirty-percent...
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...|Utah Symphony and Utah Opera Merger Proposal| || 4/23/2012|Organizational Management Analysis| |This project will look at theories of motivation relating to the merger as well as discuss positional and personal power concepts. A discussion will also address the musician’s concerns which could potentially jeopardize the merger. The project will conclude with a look at various influential tactical strategies utilized in persuasion.| Utah Symphony and Utah Opera Merger Proposal Organizational Management Analysis Bill Bailey and motivation theory in opposition to the merger Bill Bailey is the current chairman of the board of directors for the Utah Opera Organization and could pose a significant roadblock to merger the approval process if he does not publicly or privately support the merger. One area of the merger where Bill Bailey already has expressed concern is regarding the potential inequity between the two groups in a post-merger environment, which directly relates to Adam’s equity theory. In order to understand Bill Bailey’s potential concerns, it is imperative to understand the principal and philosophical logic behind equity theory. As the name implies, equity theory is model of motivation that describes the feeling that interpersonal relationships should be fair and equitable in the workplace. More specifically, Adam’s motivational theory seeks to explain how an individual’s motivation to behave in a specific manner may be fueled by perceived inequity...
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...On February 2, 2010 Kraft and Cadbury, two leading firms in the snack industry finalized their merger decision after five months of negotiation. In this report we will examine why it made strategic sense for the two companies to combine and evaluate the performance of the combined companies since its merger. In particular we will analyze the post-merger financial statements and highlight a few points regarding the accounting. INTRODUCTION OF KRAFT AND CADBURY Kraft Foods Inc. (KFT) is the world’s largest food processing company with revenues of $40 billion (fiscal year 2009) which sells its products in more than 150 countries. We are familiar with many of its global brands – Oreo, Philadelphia Cream Cheese, Trident, Nabisco, Maxwell House and others. Its products are biscuits, confectionary, cheese, convenient meals and packaged groceries. About half of the revenues are from international markets. Kraft Foods is an attractive investment in which Warren Buffett has a 9.4% stake. It is a truly global brand with 100,000 employees and a large market capitalization of $53 billion (Yahoo finance, Feb 13, 2011). In 2008, it replaced AIG as part of the Dow Jones Industrial Average. Cadbury plc is a British confectionary company which is now a wholly owned subsidiary of Kraft. It moved up its rank as second to largest player in the industry after the merger. Cadbury is substantially smaller than Kraft; about a fifth the size of Kraft. Yet, while still a public company and...
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...Case 70 Computer Concepts/CompuTech Merger Analysis QUESTIONS 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) control, (4) purchase of assets below replacement cost, and (5) synergy. From the standpoint of society, which of these reasons are justifiable? Which are not? Why is such a question relevant to a company like CompuTech, which is considering a specific acquisition? Explain your answers. Answer: Synergy is by far the most socially justifiable reason for mergers. Synergy occurs when the value of the combined enterprise exceeds the sum of the values of the pre-merger firms. (If synergy exists, the whole is greater than the sum of the parts, hence, synergy is often described as "2 + 2 = 5.") A synergistic merger creates value, which must be allocated between the shareholders of the acquiring and the acquired firms. Synergy can arise from many sources, the most prominent being (1) operating economies of scale in management, production, marketing, or distribution; (2) financial economies, which could include higher debt capacity, lower transactions costs, or better coverage by securities' analysts which can lead to higher demand for the combined company's stock, and hence to higher stock prices; (3) differential managerial efficiency, which implies that a new management can increase the value of the firm's operating assets; and (4) increased market...
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...After 17 months of negotiations, the FCC approved the merger between XM and Sirius satellite radio. Before this merger, both Sirius and XM “limped along financially for years, and [the merger] is a second chance (Simon).” Both Sirius and XM agreed to a number of conditions from both merger- opposing Democratic and Republican commissioners, such as freezing prices for three years, selling channels in smaller and cheaper packages, and allocating 8% of their channels to educational and minority broadcasters. In 2008, NPR’s Neda Ulaby stated that the merger between Sirius and XM will “not be much of a monopoly,” taking into account other sources of music consumption such as iPods and MP3 players (Simon). 10 years later, this tends to hold true in the entire music listening industry, but may not be completely accurate compared to “other” satellite radio...
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...TO: Members of Review Board FROM: DATE: March 1st, 2014 SUBJECT: Boeing Merger This memo reports the findings of the accounting practice methods, business ethics and other production problems that happened around merger process with McDonnell-Douglas. Based on a comprehensive review, I find reasonable cause to believe that Boeing did not handle its cost overruns, production problems, and the merger with McDonnell-Douglas in a transparent and/or ethical manner. Details that support my findings are as follows: • Merger with McDonnell-Douglas Lack of transparency surrounded the merger of Boeing with McDonnell-Douglas. Executives of Boeing were utterly concerned in finalizing merger with reluctant McDonnell-Douglas’ officials that they act on it taking the questionable decision of concealing serious production and financial problems. • Production Problems Boeing was not prepared to handle increase in production resulted from the merger with McDonnell-Douglas, which cause serious production problems. Its production methods were not up-to-date to handle increase in production and new products, these problems were compounded even more with high overtime, part shortages and an overall low morale in its productions lines. • Financial Information Under special aerospace industry rules that are part of generally accepted accounting principles (GAAP), abnormal costs must be recognized in the quarter in which they are incurred, therefore the expenses incurred from the...
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...Table of Contents 1. Introduction 2. Typology of mergers兼并 3. Reasons to acquire收购companies 4. Integration process 5. Quantifying定量the value of an acquisition收购 Typology of mergers & acquisitions Different forms of acquisitions: One possibility is literally字面意思to merge the two companies, in which case one company automatically自动assumes all the assets and all the liabilities of the other Such a merger must receive the approval许可of at least 50% of the shareholders of each firm An alternative选择性is simply to buy the seller's stocks in exchange for cash, shares or other securities 证劵 In which case the acquirer收购方will deal individually单独with the shareholders of the selling company A third approach is to buy some or all of the seller's assets In this case, ownership of the assets need to be transferred and payment is made to the selling firm rather than directly to its shareholders Merger accounting If company A buys company B at a market value which is superior to its book value, company A paid a premium Company A will show in its consolidated accounts an amount of goodwill equivalent to the premium paid Typology of mergers & acquisitions Merger Accounting The premium can be justified by a licence not valued in company B balance sheet or a promising product or technology Company A will be obliged each year to estimate the fair value of the goodwill and if it falls below the premium, the amount on the balance sheet must be adjusted downward...
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...CASE STUDY Merger of Perdigao & Sadia TABLE OF CONTENTS Food Sector 1 Analysis of Perdigao 2 Analysis of Sadia 3 Motives for Merger & Strategic Fit 3 Quantitative Analysis 5 Treatment of Tag-Along Shares 5 DCF Valuation 6 Weighted Average Cost of Capital 6 Stand-Alone Scenario 7 Offer Price & Swap Ratio 7 Sensitivity Analysis 8 Base Merger 8 Optimistic Merger 9 Pessimistic Merger 9 Scenario Analysis 9 Plan to Action 10 Appendix 1:WACC 11 Appendix 2:Stand-Alone 12 Appendix 3:Offer Price & Swap Ratio 13 Appendix 4:Sensitivity Analysis 14 Appendix 5:Base Merger 15 Appendix 6:Optimistic Merger 16 Appendix 7:Pessimistic Merger 17 The Food Sector The agribusiness was a large factor of Brazil’s economy, representing 6.7% of GDP in 2008. The South American country was one of the top producers and consumers of poultry, pork, and beef in the world. This was due to the country’s productive agricultural regions, great climatic conditions and knowledge in the labor of such products allowed them to remain competitive in the international markets. Furthermore, Brazil maintained a relatively low currency in comparison to the U.S., allowing them to remain aggressive players in this sector. In theory, lower rates allow for better performance when exporting products to other countries, as they are less expensive for the buyer. Although this can be seen as an advantage, if...
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... | |Mergers & Acquisitions: An Introduction | |Prof. Ian Giddy, New York University | |[pic] | | | |INTRODUCTION | |This is an introduction to the subject of mergers, acquisitions, buyouts and divestitures as covered in my Mergers & Acquisitions course. The purpose is to delineate how and why a merger | |decision should be made. The course focuses on mergers and acquisitions in the context of private as well as publicly traded companies. Acquisitions of private companies account for the | |majority of transactions. To properly assess a potential merger we need to perform fundamental strategic and financial analysis, but remain aware...
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