acquisition of Wella AG
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Proctor and Gamble merger and acquisition of Wella AG(Germany):
In regards to the above mentioned merger and acquisition please answer the following:
1. How can you determine whether this deal was considered a success or failure, and why?
2. What are at least four international financial management issues the combined company doing business internationally must address that would not be a concern of a company just doing business domestically?
3. What are some ways in which an international company can protect itself from any adverse effects of or risks from the issues chosen in #2 above, giving specific examples from the specific companies chosen above?
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Proctor and Gamble merger and acquisition of Wella AG(Germany)
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1. How can you determine whether this deal was considered a success or failure, and why?
In any merger or acquisition deal, the success can be best determined by looking at the improvement in performance levels, as indicated by the financial statements of the merged entity. As it is truly said that the "Whole" is greater than the sum of two parts, the merger of P&G and Wella AG can be termed successful only if the combined financial performance of the merged entity resulted in benefits or improvements that would not have been possible if the companies would have operated on a standalone basis. This quantitative benchmark for judging the success is the most objective measure for judging the outcome of a merger.
Another indicator that can display the success or failure of the merger is the improvement in operating efficiency of the combined entity, which clearly reflects the level of operating synergies due to the merger. The improvement in operating margins signify that the merger has resulted in positive synergies for the merged entity.
Further, improvement in market share as well as market reach also critical indicators for evaluating the success of any merged entity. The combined strength of both P&G and Wella's products, brand recognition and reach can be combined and leveraged to obtain higher growth, increased market share and brand recognition in the marketplace. Therefore, such indicators clearly display the success of the merger transaction.
The primary rationale behind the acquisition of Wella AG by P&G was to gain an entry into the Salon Market. In ...
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