Early in 1972 Nicholson dad to fend off a take over attempt by H.K. Porter Company Inc., which controlled 30.5% of the company's stock. Porter made a cash tender offer to stockholders. However, Porter did not get enough stock to take over Nicholson. In trying to fight the takeover Nicholson made several merger overtures to other companies like VLN Corp. A few years back, it had rejected an offer from Cooper Industries.
Cooper Industries & Nicholson
Cooper was interested in Nicholson because of its competitive strength in the hand tools industry. Nicholson had a 50% share for files and wraps with a very strong brand name and high quality line. It also had a 9% share of the 200 million handsaws and saw blades market with excellent brand & quality. It had a very effective and large distribution system across US, Canada and overseas. Cooper industries believed that Nicholson can achieve 6% annual sales growth and also bring down the cost of goods sold from 69% to 65% and selling and administrative expenses from 22% to 19%, thereby increasing its profitability. Cooper would be able to use Nicholson’s distribution system to cross sell Cooper’s hand tool lines in the industrial and consumer markets.
Cooper anticipated that the Nicholson acquisition would lessen its earnings volatility and currently Nicholson is in the merger market to fend off the raid by H K Porter Company.
Valuation of Nicholson File (without merger)
Please see Exhibit 1 and Exhibit 3 for details and assumptions
Assuming that Nicholson will continue to have sales growth equal to 2 % with cost of goods sold at 69% of the net sales, its market price will stay in the ($19 to $27 range in 1972) and ($22 to $31 in 1976) because of the operating in-efficiencies...
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...n stronger growth of its product lines, with a stronger balance sheet. The Nicholson shareholders, as per Exhibit 2 attached, will get a PE ratio of 14 to 17, from the current 10 to 14 range. The EPS will go up from $2.28 in 1971 to $5.72 in 1973, after the merger. Cooper offers a growth opportunity for Nicholson product lines and its offer at $50/share will attract the unaccounted shares and the shares owned by speculative. Cooper Industries already has the support of 206,000 (35%) shares and needs another 86,000 shares for a 50.1% majority needed as per Rhode Island merger law.
Per Exhibit 8 attached, Cooper will be able to get this 50.1% majority. Also, the Cooper stock trades on the New York Stock Exchange and will provide greater liquidity to the Nicholson shareholders. It will be in the best interests of the Nicholson Management to accept this friendly merger.
At the same time, Dawson should be pursuing opportunities to sell the retail component of its business. NBC's investment bank could collaborate on this objective. The proceeds resulting from this transaction as well as improvements to its cash position could be destined to repay the term loan that Dawson has with NBC, issue dividends, and or contribute to the improvements, suggested earlier, to Dawson's operations and organizational structure.
Last year, the company recorded revenues of C$45,394 million, an increase of 6.53% over FY2014.The operating profit of the company was C$1,601 million in FY2015, a increase of 142% compared with FY2014, year in which the company had a decrease of 49.9% on the operating profit, and the net profit of the company was C$623 million in FY2015, an increase the total of FY2014, C$53 million (Loblaw, 2016). Loblaw’s stock price (L.TO) ended the year priced at C$65.34, 6.5% higher than price at the begining of the year C$61.35 (Yahoo Finances,
When brothers Sidney and Stanley Goldstein partnered with Ralph Hoagland in Lowell Massachusetts in 1963, they were unaware of the nationwide impact that CVS would have on the retail drug industry today. Just six years after establishment, Goldstein and Hoagland sold to Melville Corporation and began acquiring companies including Revco, Prescription Health Services, People’s Drug and Eckerd Health Services. This led to an increase in sales reaching one billion dollars in 1985 as well set the bar for all pharmaceutical companies within the United States.
I am interest in the study of this topic because I am curious about the financial effects of such a merger.
The second section will be a report to the board of directors that identifies a synergistic acquisition candidate for Target. This section will identify Target's proposed acquisition terms, price, financing, and potential negotiation strategies. This segment will also include price / earnings ratios, book value, current market value, and liquidation based on the supporting financial data. Also in this part will be a discussion of the general and specific risks inherent in an acquisition strategy.
Mergers and acquisitions in financial services business area are very common and result in consolidation of the business unit. Acquisition is beneficial for all sides involved and Santander's acquisition of Abbey National of the UK is an evidence of this. Abbey has a major position in the United Kingdom mortgage market. Its strong distribution network represents for Banco Santander and Abbey shareholders a valuable opportunity: application of Banco Santander's commercial and technological practices to Abbey's banking operations.
I consider this was a win-win situation, the old board of Cadbury got what they wanted, a fair price for their shares, and regarding Kraft, having purchased the world’s largest confectionery, was a deal.
Royal Dutch Shell also known as Shell, completed its acquisition of BG Group on 15 Feb 2016 with end up negotiation with $70 billion to take over BG Group. The defenses raid start since year 2015. Many people think that Shell act to take over BG is not a good trend because the BG is getting bigger and bigger, many others oil company like Chevron Corporation, ExxonMobil Corporation which is one of the biggest and famous oil company are give up to take over BG, because BG is very expensive, even BG got great resource and nice potential to make their company roses. In long term investing, Merger arbitrage and trading isn’t usually the bad way but by buying into the BG-Shell deal, not only do investors stand to profit from the merger, they’ll
Gaughan, P. A., 2002. Mergers, Acquisitions, and Corporate restructuring. 3rd ed.New York: John Wiley & Sons, Inc.
The $55 value is on the lower range of the analyst eztimates, with a best guess estimate of $67.94. Since the value of the stock had been below $45 for 4 months, the offer of 55 dollars represented a 29% premium to investors. Bollenbach knew that management would be resistant of any attempt to be acquired, regardless of price, because of failed previous attempts to negotiate a friendly merger at year end 1996. The 55-dollar benchmark created an expectation for ITT management to achieve that level, or higher and the premium is enough to demonstrate to investors it is a real offer. Their support will be key as they will have a vote deciding the fate of the poison pill provisions which need to be removed to make the deal necessary.
The first paper referring to the case study was written by Benjamin Klein, Robert Crawford, and Arman Alchian, "Vertical integration, appropriable rents and the competitive contracting process." (Klein et al, 1978). It discusses "possibility of post contractual opportunistic behaviour" (Klein et al., 1978 p297) and is a great example of vertical integration used to relieve a hold up in the face of assets specificity, as occurred between GM & Fisher body. The paper has gone on to be considered the “Prevailing view” of the case study, and is supported by other papers.
The company faces intense competition for the clients that it serves and the products and services it offers. There has been significant consolidation as financial institutions with which the company competes have been acquired by or merged into or acquired other firms. For instance, in November 2010, The Charles Schwab Corporation acquired Windward Investment Management, Inc. for $150 million in cash and stock. In June 2009, TD Ameritrade completed the acquisition of thinkorswim Group Inc. thinkorswim is among the fastest growing online brokerage firms and has unique trading and investor education capabilities, particularly for the fastest growing segment of the industry-options trading. So, this acquisition underscores TD AMERITRADE's position as a successful industry consolidator. Consolidation in discount brokerage industry is creating larger rivals to compete with.
What is the possible meaning of the change in stock prices for Berkshire Hathaway and Scottish Power plc on the day of acquisition announcement? Specifically, what does the $2.55 billion gain in Berkshire’s market value of equity imply about the intrinsic value of PacifiCorp?
Mergers and acquisitions immediately impact organizations with changes in ownership, in ideology, and eventually, in practice. There are multiple reasons, motives, economic forces and institutional factors that can, taken together or in isolation, influence corporate decisions to engage in mergers or acquisitions. The financial risks of merging with or acquiring an organization in another country and how those risks can be mitigated are important issues for corporations to conduct research on. This paper will examine the sensible and dubious reasons for mergers and acquisitions and the benefits and costs of the cash and stock transactions.
At a macro level as a result of the acquisition the combined size of Turner & Townsend Thinc was considered to be of strategic benefit to both firms. While there have been no official mass redundancies, role duplication has resulted in early retirement and resignations. However, the common problem faced after the acquisition is power struggles, excessive overhead, bureaucracy, uncontrolled layering, and decision strangulation.