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    Merger Between Starbucks and Dunkin Doughnuts

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    For this SLP, think about your SLP company (Starbucks) and the possibility of it merging with another company (Dunkin Donuts.). Answer the following questions:

    1. If you were to pick one company for your SLP company to merge with, what would it be? Explain your choice with respect to possible benefits of this merger and why you would choose this company over any other choice.

    2. How would you finance a takeover of this chosen corporation? Explain your reasoning.

    3. What would your second and third choices be for a merger with your SLP company? Again, explain your reasoning for wanting to merge with these companies, and why they would be second or third choices rather than your first choice.

    4) What do you perceive you have learnt in Module 5 SLP? Which of the following learning objectives do you feel you have mastered?

    Explain and discuss financing options for financing mergers and acquisitions
    Identify success factors in mergers and acquisitions

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    Solution Preview

    If I had to pick one company, I would select Dunkin Donuts. There is a good strategic fit between the two companies as they are in the same industry and offer similar kinds of products. The merger with Dunkin Donuts will yield several benefits to Starbucks. It will help the company to significantly expand its reach with the current retail network of Dunkin Donuts.

    The company will be able to exert greater control over the coffee market with the merger because the combined strengths of two companies will not only result in synergies in terms of sales and revenues, but will also allow the firm to obtain cost related synergies as combined strengths in terms of infrastructure, people and management and procurement capabilities can be leveraged to improve operational efficiency. The company will be able to generate economies of scale due to ...