Acquisition Project Research: Volkswagen Example
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The idea of the project is for Volkswagen to acquire Ford and Fiat in Brazil. Volkswagen, Fiat, GM and Ford account for 80% of the Brazilian auto market, so if any of those companies come together, they will be the leader by far.
- Conduct a research for an acquisition with Fiat and Ford separately. Research how each company will individually benefit from the acquisition.
- Discuss corporate governance issues involved in a acquisition deals.
- Discuss such things as: shareholders, board of director's, management's, and regulator's views on the acquisition.
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Solution Summary
This solution discusses the project involving Volkswagen acquiring Ford and Fiat in Brazil.
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Volkswagen: Acquisition of Ford and Fiat
Introduction
In the Brazilian market, Volkswagen, Fiat, GM and ford accounts for the 80% market share in the automobile industry. If all these companies come together in the Brazilian market then new company will become market leader. This paper is based on the idea of the project of Volkswagen to acquire Ford and Fiat in Brazil. Currently, Brazil is one of the top automobile manufacturing countries in the world in terms of volume. The sales of automobile sector are increasing continuously because of the financing packages by the financial institutions and the improvement in road connectivity (Brazil Automobile Industry Till 2010, 2010).
Acquisition with Fiat
In Brazil, Fiat is the most popular brand in the automotive industry but at the same time Volkswagen also has competitive market share (LaReau, 2010). The continuous research and development on the design and efficiency in the manufacturing process is causing an increase in its market leadership. The management of Volkswagen is also planning to invest a large amount about $3.5 billion in coming years (Ross, 2009). It would cause an increase in its market share. The acquisition of fiat will be beneficial for Volkswagen as it would be able to capture the large customer base of Fiat. The acquisition of Fiat by Volkswagen would facilitate it as number one car maker in Brazil.
The acquisition will also be beneficial for the Volkswagen as it would be able to capture some brands of Fiat that are well recognized in the Brazilian market and also globally for its sporty genes and great tradition such as Alfa, Uno etc. (Volkswagen Eyes Fiat's Alfa Romeo Brand - Newspaper, 2010). The sales of these brands are quite significant in the Brazilian market that would cause an increase in the market position of Volkswagen. It will also be less costly for the Volkswagen to expand its market in Brazil. The acquisition will also be beneficial for the Fiat as it would cause an increase in its projects and new brands due to R&D facility of Volkswagen. It would also be effective to reduce the problem of Fiat found in its manufacturing process that caused a fine of $1.2 million. At the same time, it will also cause an increase in the operational effectiveness of Fiat due to large ...
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