I need to benchmark 3 companies who have had success and unsuccessful experiences while merging. 2 of the companies need to be successful and 1 needs to be an unsuccessful merge.
Some issues that I would like to address are: Merging - adjusting to foreign currencies, cultures, customs, etc.
For each of the 3 companies benchmarked I need you:
To discuss (1) situation facing the company, (2) how the company responded to the issue; and, (3) outcomes of the company's response to the situation.
Wachovia/Golden West Merger
Situation Facing Company
Wachovia, a financial services company in the U.S. was facing problems relating to its market presence. Wachovia is one of the largest diversified financial services companies in the US with leading market share in numerous high-growth markets, extensive product offerings and industry-leading customer service. It is the largest bank in the Southeast. It is also a top 10 mortgage and auto loan originator, a leading national brokerage firm and fund manger, combined with a well-positioned corporate and investment bank. Although the financial institution offered similar products to those of other banks, and sometimes better, they were having issues attracting new customers. A major reason is because the company is not well-known and customers were more inclined to take their business to financial institutions such as Bank of America and Chevy Chase Bank. The management team at Wachovia became concerned as they were not meeting their profit-making goals.
Ken Thompson, Chairman and CEO of Wachovia decided to enhance the market presence, product set, and mix of businesses by acquiring Golden West and expanding into the western states. The goal was to deliver a stronger value to their customers and shareholders. Based on pro forma date, the combined company will have an estimated $700 billion in assets and $107 billion market capitalization (Wachovia, 2006).
Wachovia offered Golden West a 77% stock buyout and 23% cash for the $25.5 billion offer. Golden West wanted two seats on the Wachovia Board. This offer is financially attractive and low risk. The merger will accelerate the long term growth rate. There is compelling revenue synergy. The IRR is 17%. Break-up fee of $995 million payable (Wachovia, ...
Three companies that have merged with other companies are discussed in this benchmarking assignment. Information provided include situation facing the company, how the company responded and the outcome of the company's response.