1a. The value per share from synergies is around $15.92.
1b. While there are a number of synergies possible from this merger, $45m profit in synergies resulting from Gatorade’s warehouse distribution system seems high. It seems unlikely this distribution system would provide immediate access, economies and efficiencies to new customers, and it provides level of certainty that PepsiCo products could be exposed to potential new clients on a meaningful scale. $60m in synergies for procurement seems low because there may be more savings in the areas of procurement and purchasing where common raw materials might be used in similar products. $65m in synergies from better capacity utilization seems reasonable. $34m in synergies in distribution of Quaker Oats products through DSD channels also seems high because it is not confirmed that this would provide Quaker Oats access to new customers. Other foods synergies estimates based on 10% of Combined Pro-Forma sale seems low based on a number benefits attached to that arrangement.
1c. The acquisition will likely yield a labor (workforce) reduction in in the areas of Marketing, Accounting and Human Resources due to the possible duplication of work and inefficient use of resources. Any benefit obtained from such reductions must be valued. Additionally, access to new technology and research will likely enable both organizations to enjoy synergies in the form of large-scale cost savings and new product development.
1d. The value attached to the reduction of workforce and access to new technology should be more than $35m.
2. The Gatorade business in Quaker Oats is the most profitable due to its high appealing to young generation and athletes for gaining energy and preven...
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...d a combination with PepsiCo would be beneficial. Its products could be distributed through channels with global reach. The company would realize more diversification in the areas of beverages. Profitability may improve through large cost savings from common factors, which might eliminate the need for any duplication of work and waste of resources.
· Cons. There is a risk that Quaker Oats could be undervalued. There is a high potential for management disputes in areas such as control, strategies and budgeting. Quaker employees may become redundant, and complex operations and the staff’s resistance to change may cause gross inefficiencies.
7. In Morrison’s view, the deal should not proceed. There are too many risks in terms of control, inefficiencies (redundancy), devaluation of shares, and potential divestment of important assets and key employees.
Also, mergers and acquisitions could be used by the company to its advantage. That would be following into footsteps of the CVS recent acquirement of Arbor Drug and Revco and comparable transactions performed by the CVS competitors such as Rite Aid acquiring Marco, Thrifty Payless, and K&B.
The merger made way for many cost saving opportunities; marketing expenditures and programming being two of the greatest options. Before the merger, large sums of money were spent on finding a way to compete with each other. Mainly advertising, but also using resources to get celebrities to join their company. However, as a combined company, Sirius XM now has a stronger position and can allocate that money elsewhere. Possible benefits include improved efficiencies, greater economies of scale and not requiring any reduction in staff or severance payments. On the contrary, possible drawbacks include not being able to increase prices and low threat of suppliers.
In our internal analysis of the merger between Comcast Corporation and Time Warner Cable (TWC) we looked at the internal strengths and weaknesses of the acquired company. By analyzing these strengths and weaknesses we determined that Comcast Corp. proposal to acquire TWC will have potential benefits. Comcast Corporation is already a giant, owning the nation’s largest cable distribution network and TWC is the second largest cable distributor serving roughly 12 million households. A combination of the two companies is said to generate multiple pro-consumer and pro-competitive benefits (Grimes 1).
Overall, we think advantages outweigh disadvantage but Sanchez should revise the proposals. First he should raise the equity percentage that Pepsi can receive. Depending on WACC, we propose to increase to 40%. Second, regarding to management, Deltex was long time Pepsi’s bottler and their relationship had worked well in the past years. However, with such big investment, we think Pepsi should take measures to ensure its strategies were taken. Those measures included Deltex should report its operations and strategies to Pepsi on the monthly basis, Pepsi should reserves the right to appoint half of the Deltex board of directors and CFO or other key personnel except operating managers. Also, Pepsi should be given a right of first refusal to any transaction in which Sanchez was to sell his shares as in Gallardo joint venture.
...dditionally, the merger can take place in smaller phases. For instance the first phase may include change of the physical look of the branches and the signage - – so as to convey a consistent view and experience for its customers. This phase may also include effective communication to the employees to educate them about the merger, ensure them of their positions and encourage them to participate in the merger. Second, the firm can totally combine the bank’s technology and the information systems which will allow the merged firm to operate as a single entity and to become fully operational. The management should implement the merger with care and prudence, aiming for minimal disruption for the customers and should communicate extensively to ensure all its stakeholders are kept fully informed as they make changes.
As we all should know, PepsiCo is one of the world’s leader in convenient food and beverages. PepsiCo shares are traded worldwide and particularly in NYSE (United States). PepsiCo is in the same line with Coca cola and Cadbury Schweppes as the dominating beverage companies. PepsiCo has successfully built a great brand name rivaling with coca cola, probably because PepsiCo unlike coca cola has its own bottling companies. With a competitive strategy based on differentiation rather than cost leadership like its fellow competitors PepsiCo invests highly in new packaging, flavors, formulas to outsmart their competition. Founded in 1919, producing a variety of sweet and grain-based snacks, carbonated and non-carbonated
The beverage industry is highly competitive and presents many alternative products to satisfy a need from within. The principal areas of competition are in pricing, packaging, product innovation, the development of new products and flavours as well as promotional and marketing strategies. Companies can be grouped into two categories: global operations such as PepsiCo, Coca-Cola Company, Monster Beverage Corp. and Red Bull and regional operations such as Ro...
When two companies decide to combine forces and become one bigger, richer mega company, it is called merging. This process forms a new company, combining the money and ideas of what used to be two different entities into one. This, however, is not the only thing that results from merging two different companies, and since we will be discussing the merging of two companies in the pharmaceutical industry, the impact will be incredible. Of course, the merging of two companies will not only have positive impacts but it will have many negative side effects as well. Furthermore, depending on the size of the merging companies and the goals of the people leading these companies there will always be contradictions according to the long-term goals or short-term goals depending on what both parties’ interests are. Our company, Verduga Inc. is contemplating to merge with Coronado-Salinas Inc., so before we rush into such a merger we must contemplate the positive and negative aspects of such a move. When it comes to mergers there are always many possible positive and negative impacts due to the effects of merging; these effects more widely impact the fields on research and development, on employment and management, stocks and shareholders, monopolization, and ingenuity.
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 the end of 1991, PepsiCo had EBITDA of $2.1 billion or operating profit margin of 10.8% - down from profit margins of 12.2% and 11.7% in 1990 and 1989, respectively. In addition, net sales only grew by 10.1% in 1991 – considerably low versus growth of 16.8% and 21.6% in 1990 and 1989, respectively. Recent acquisitions of Taco Bell franchises in 1988, bottling operations in 1989, Smiths Crisps Ltd. and Walkers Crisps Holding Ltd. in 1989, and Sabritas S.A. de C.V. in 1990 aided sales in growth in 1989 and 1990. Additionally, a joint venture with the Thomas J. Lipton Co. in 1991 to develop and market new tea-based beverages may lead to greater sales in the future. However, there is some need for an immediate return on its investments in order to sustain historical revenue growth and increase the current profit margins.
The A-Team has introduced a new product called Pepsi Platinum for the company, PepsiCo, in Phase Two. This dissertation will identify segmentation criteria that will impact PepsiCo target market selection. This dissertation will describe the organizational buyers and consumers of Pepsi Platinum and factors that influence their purchasing decisions and discuss how these factors will impact PepsiCo’s marketing strategy. Finally, this phase shall analyze current competitors and define the competitive landscape for Pepsi Platinum.
Thanks to my fascination with PepsiCo and partly because this is an assignment, I went online and search for some of PepsiCo’s most successful and ongoing marketing campaigns and strategies. During my research I noticed several daring marketing strategies Pepsi employed throughout the years. For example, gaining the support of Michael Jackson in the 1980’s and latest gaining the endorsement of global pop star Beyoncé.
Frito-Lay controlled 40% of the USA-market assuring high volume production by increasing internal coordination with PepsiCo developing the Power of One strategy consisting in mixing snacks with beverages and sauces produced by Peps...
Control of market share is the key issue in this case study. The situation is both Coke and Pepsi are trying to gain market share in this beverage market, which is valued at over $30 billion a year. Just how is this done in such a competitive market is the underlying issue. The facts are that each company is coming up with new products and ideas in order to increase their market share.