Among the main factors proposed as rationale for mergers, from the society’s point of view the most justifiable factor is synergy. Synergy refers to the economic benefit which could be achieved through the merger of companies and is often considered as the major driving force for a merger. With synergy the post merger share price of the company increases and shareholders will benefit. The synergy from the merger could be attributed to a handful of factors, such as increase in revenue, combination of talent and technology, or cost control. Two businesses plan to merge to form a single company which has the capacity to produce more returns than either firms could have been able to independently, or to form a single company that can eliminate
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ICI’s agenda behind merger plan is expansion of business and so the major factor to be considered as a rationale is synergy. That is the merger should give more value to the customers as well as better return for the company. ICI as such is running profitable now and the merging company should complement its business.
The merging company has to be in line with ICI’s international theme concept – providing food chains of all varieties and tastes. So, not all factors are relevant for the merger plan and decision making for ICI. It largely depends on the current situation of ICI and its purpose behind the merger proposal. Considering the specific case of ICI it should take in factors like synergy, tax considerations and diversification as their important rationale for merger because the primary aim of the merger is Expansion.
ANSWER …show more content…
Since these will vary from one acquiring company to another, different companies would get different values.
ANSWER 6:
(a) In order to keep the firm independent, Nero's management may implement strategies like Poison pills and Golden parachutes.
Explanation:
Poison Pill is like to create a protecting cover against a takeover bid by another company by implementing a prohibitive cost that must be paid once the takeover is done.
An agreement between an employee and accompany that provides good financial benefits to the employee upon job termination is called Golden Parachute
(b) When many firms start bidding for Nero, the result would drive up the value of the stock .This competition between the firms will help to get maximum price for their stock.
(c) The management must tryto pitch their value and pull off their points in order to get a higher price. If it remains unsuccessful, then they must bring in more companies to create competition.
(d) Yes there may be a potential agency problem with Nero's acquisition-tensed about the job security and hence may go for golden parachutes. In such a case, it will not prefer the
ICI’s agenda behind merger plan is expansion of business and so the major factor to be considered as a rationale is synergy. That is the merger should give more value to the customers as well as better return for the company. ICI as such is running profitable now and the merging company should complement its business.
The merging company has to be in line with ICI’s international theme concept – providing food chains of all varieties and tastes. So, not all factors are relevant for the merger plan and decision making for ICI. It largely depends on the current situation of ICI and its purpose behind the merger proposal. Considering the specific case of ICI it should take in factors like synergy, tax considerations and diversification as their important rationale for merger because the primary aim of the merger is Expansion.
ANSWER …show more content…
Since these will vary from one acquiring company to another, different companies would get different values.
ANSWER 6:
(a) In order to keep the firm independent, Nero's management may implement strategies like Poison pills and Golden parachutes.
Explanation:
Poison Pill is like to create a protecting cover against a takeover bid by another company by implementing a prohibitive cost that must be paid once the takeover is done.
An agreement between an employee and accompany that provides good financial benefits to the employee upon job termination is called Golden Parachute
(b) When many firms start bidding for Nero, the result would drive up the value of the stock .This competition between the firms will help to get maximum price for their stock.
(c) The management must tryto pitch their value and pull off their points in order to get a higher price. If it remains unsuccessful, then they must bring in more companies to create competition.
(d) Yes there may be a potential agency problem with Nero's acquisition-tensed about the job security and hence may go for golden parachutes. In such a case, it will not prefer the