In this assignment, we will study eight different mergers that will help us understand them in the economic and financial context of the companies that are merging. For each merger, we will have to answer the following questions:
Did historical results justify the deal? Was the merger unavoidable to obtain EPS growth?
Were the bid / merger consistent with the corporate development principles?
Did the bidder or senior merger partner practice top down or bottom up management?
Was the timing right? Do the subsequent results justify the bid/merger? If not, why not?
We will find answers to the questions in this assignment.
[...] The acquisition of Rossignol by Quiksilver 6. Sanofi Aventis merger 1. Alcatel Lucent merger Alcatel and Lucent merged on the December 1st 2006. Before this merger, synergies between those two majors were highly critiqued by financial analysts. This merger of 13.5 billion of dollars gave birth to a major of 33 billions of dollars. Originally, Alcatel is “a French company that provides hardware, software, and services to telecommunications service providers and enterprises all over the globe”1 and Lucent Technologies was a technology company in USA. [...]
[...] Results totally justified the alliance because turnover increased by 40% from 2003 to 2004. Sony and Ericsson held 50% each of shares, and they are not listed on the Stock Exchange, so we could not follow the evolution of share price. To conclude, Sony Ericsson brings a new product thanks to their technological alliance, and synergies that ensue from this joint company help this new entity to be highly positioned into the market and have a good awareness. Currently results shows that their alliance was really successful, and their timing was right. [...]
[...] Originally, BNP, alias Banque Nationale de Paris, and Paribas were main banks in France. In 1999, Société Générale and BNP ran a tough competition on the bank market. Société Générale was bidding for Paribas and BNP was bidding for Société Générale and also for Paribas. At the end, BNP lost its bid for Société Générale but win the one for Paribas. In 1999, the bank market was becoming concentrated and investment companies were on the flip side because of the tough competition in banking industry in Europe. [...]
[...] On the other hand, Allied Domecq was mainly decentralized in USA. Pernod Ricard turnover in 2004 was 3.6 million euros with an EPS of € and Allied Domecq 4.8 million euros with and EPS of € In other word, Allied Domecq had a bigger turnover and structure than Pernod Ricard. Pernod was present mainly in Europe and only focused on wines and spirit beverage and have failed in non-alcoholic. This company made strategic acquisitions all over its course, and had the strong ambition to become the first one, in front of Diageo, and Allied Domecq. [...]
[...] Even if everything about either companies or market seems to be right, financial results or share price can be weaknesses. So, it is important to understand the drivers, to analyse if financial situation can be adapted, and to see if corporate culture and management can figure on. [...]
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