George Lam
10/19/15
Sharon Joseph
Fin. 4930
Rowshan Begum
Prof. Poniahe! "ar#ar$ %ase S&u$' ( %ooper )n$us&ries
)n &his ase s&u$'* we are presen&e$ wi&h an a&&emp&e$ merger an$ a+uisi&ion ,e&ween %ooper )n$us&ries -+uiring %ompan' an$ ihoson Fie %ompan' -2arge& -2arge& %ompan'. &hough &here was an offer &hree 'ears prior &o &his ase s&u$'* &he irums&anes surroun$ing &his po&en&ia $ea has hange$ enough &o gi#e %ooper )n$us&ries an oppor&uni&' &o a+uire ihoson Fie %ompan'. B' re#iewing &his ase s&u$'* we hope &o no& on' e#aua&e &he ompan's finanias* ,u& aso $e&ermine whe&her or no& &his a+uisi&ion is in ,o&h %oopers an$ ihosons ,es& in&eres&. 2o s&ar& s&ar& off* we ,eie#e &ha& &he a+uisi&ion of ihoson wou$ grea&' ,enefi& %ooper )n$us&ries. 2here is a o& of s'nergis&i #aue #aue &ha& an ,e rea&e$ from &his &his $ea. or$ing &o &he ase s&u$'* &he s'nergies gaine$ from &his merger are as foows 1. 8. 3. 4.
Re$ue$ Re$ue$ %GS %GS ,' 46 -796 -796 $own &o 756 Re$ue$ Re$ue$ $min $min :pen :penses ses ,' ,' 36 -886 -886 $own $own &o 196 196 )nrease$ )nrease$ Grow&h Grow&h ra&e ra&e ,' 4;56 4;56 -up from from ihos ihoson onss 86 &o &o 7;<6 )nrease$ )nrease$ =emographi =emographi ou&reah ou&reah -wi -wi a+uire a+uire a,ii&' a,ii&' &o se pro$u& pro$u&ss in &he 13< oun&ries &ha& ihoson area$' has infuene in aong wi&h 140 Loa saes reps 5. )nrease$ )nrease$ Saes Saes fore fore > =is&ri,u&i =is&ri,u&ion on -4? $ire& $ire& saes saes reps* reps* > 8*100 har$ware har$ware whoesaers whih se &o 53*000 re&ai ou&e&s 7. )nrease$ )nrease$ :per&is :per&isee in Fie Fie > Saw pro$u& pro$u&ss -8? fie fie > saw saw engineers engineers <. )nrease$ )nrease$ @ar!e& @ar!e& share share in &he &he "an$ saws saws > Saw Saw ,a$es ,a$es mar!e& mar!e& -96 he$ ,' ihoson whih if a+uire$* wou$ now ,eong &o %ooper
Base$ on our aua&ions in &he =%F ana'sis* we foreas&e$ &he share prie of ihoson -pos& merger &o ,e A<5.54. f ourse* &his shou$ on' ,e &he ma:imum amoun& &ha& %ooper shou$ pa' &o a+uire ihoson. e ,eie#e &ha& &he highes& &ha& %ooper shou$ go wou$ ,e A58* whih is sigh&' a,o#e ihosons ,oo! #aue of A51.85. 2his offer shou$ ,e a,e &o re&ain i&s a&&ra&i#eness as i& is A10 a,o#e wha& CL has offere$ an$ is aso an 1?.1?6 mar!up from wha& &he ihosons urren& &ra$ing #aue of A44 is. -Pease see a&&ahe$ for aua&ions i&h %oopers in&eres& in ihoson* &he' ha#e &o &a!e in&o aoun& &he #ar'ing onerns of a groups in#o#e$ in or$er &o ma!e more informe$ $eisions going forwar$ espeia' when eah group has h as $iffering e#es of ,argaining power.
%ooper* ha#ing 89*000 shares of ihoson* aso has &he suppor& of Por&er who is &he arges& shareho$er in possession of 1<<*000 shares. Beause of &his suppor&* %ooper is rea&i#e' in a $een& posi&ion in &erms of ,argaining s&reng&h* ,u& &he' are s&i fae$ wi&h &he issue of ha#ing enough shares for a maDori&' #o&e* whih is one of &heir maDor onerns. 2he' wou$ nee$ an a$$i&iona ?4*5?4 shares* whih wou$ mos& i!e' ome from &he Speua&ors an$ &he shares &ha& are unaoun&e$ for. @ore i!e'* &he share wou$ ome from speua&ors as &hose &ha& are unaoun&e$ for are more i!e' &o si$e wi&h whihe#er ompan' ihoson suppor&s. 2he as& onern is &ha& &heir offer is no& en&iing enough for a in#o#e$. )n Por&ers ase* his arges& onern is &ha& CL migh& ,e &he a+uiring ompan' an$ was unhapp' of &he fa& &ha& he wou$ ,e reei#ing CL preferre$ s&o! in e:hange for his ihoson s&o!. "e aso feare$ &ha& &he CL s&o! wou$ no& ha#e enough i+ui$i&' as i& was on' so$ on &he merian S&o! :hange in sma por&ions. Por&er* ,eing &he arges& shareho$er* ho$s &he grea&es& amoun& of ,argaining power as he an ,e &he $ei$ing fa&or in who wins o#er ihoson. e:&* we ha#e CL whih ,rings a ompe&ing offer &o ihoson an$ is &he preferre$ ompan' &ha& ihoson wan&s &o merge wi&h. 2heir main onern is &he same as %oopers in &he sense &ha& &he' $o no& ha#e &he neessar' shares &o ho$ a maDori&' #o&e o#er %ooper. 2he ,argaining power &ha& CL has is rea&i#e' ow ompare$ &o a o&her groups as &he' ho$ &he eas& amoun& of shares a& 14*000. =espi&e &ha&* &he' $o ha#e &he ,a!ing of &he ihoson fami' an$ managemen&. 2he offer &ha& CL propose$ is rea&i#e' ower ompare$ &o wha& we sugges&e$ &ha& %ooper shou$ pa' whih means &ha& CL shou$ in &urnE inrease &heir offer &o ma!e i& more appeaing. ihoson* ha#ing &he seon$ arges& amoun& of shares of 11<*000 has a grea& $ea of ,argaining power as we. 2heir onern is &ha& &he' wi ,e a+uire$ ,' %ooper* as ihoson is more omfor&a,e wi&h CL as &he a+uiring ompan'. i&h &ha& sai$* ihoson is suppor&ing CL in &his $ea $espi&e wha& %ooper )n$us&ries an ,ring &o &heir ompan'. Las&'* we ha#e &he speua&ors an$ &he shares &ha& are unaoun&e$ for whih amoun&s &o 84<*000 shares. e ,eie#e &heir main onern wou$ ,e ha#ing &he grea&es& re&urn on &heir in#es&men&. f ourse &ha& wou$ mean &ha& %ooper wou$ ,e a+uiring ihoson. )n &erms of ,argaining power* &he' are aso +ui&e high as &he' are going &o ,e &he $ei$ing fa&or in whe&her or no& %ooper wi a+uire ihoson. 2he shares &he' on&ro are wha& %ooper nee$s &o ha#e &he maDori&' #o&e. 2he amoun& nee$e$ from &his group wou$ ,e a &o&a of ?7*5?4 shares. )f %ooper wishes &o a+uire ?06 of &he ou&s&an$ing shares* &he' wou$ a&ua' on' nee$ 43?*800 shares as &he' area$' own 89*000 shares. e ,eie#e &his shou$ ,e fun$e$ &hrough an issuane of ommon s&o! &o urren& s&a!eho$ers of ihoson. i&h a prie offer of A58* an$ a urren& s&o! prie of A84* we aua&e$ &ha& &he e:hange ra&io wou$ ,e 8.177777< %ooper
shares for 1 ihoson share. 2o on&ro an ?06 s&a!e in ihoson* %ooper wou$ ha#e &o issue 949*433.33 new shares. -Pease see a&&ahe$ for aua&ions 2o onu$e &his ana'sis* we ,eie#e &ha& &he offer of A58 shou$ suffie in sa&isf'ing a par&ies in#o#e$. =ue &o &he amoun& of s'nerg' &ha& wou$ ,e rea&e$ as is&e$ a,o#e* &his offer wou$ ,e &oo goo$ &o pass for ihoson. f ourse* &his offer wou$ ,e pai$ ,' issuing new ommon s&o! in e:hange for ihosons shares.