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Mergers

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Merger/Acquisition
Glaxo Wellcome (UK) - SmithKline Beecham
1. Introduction . done
2. Price Paid What are the factors used in determining the price paid? What are the pros and cons of merging or acquiring another company?
3. Measurements of Success How can you determine whether this deal was considered a success or failure, and why?
4. Behavior of Stock after Announcement. Why the acquiring company's stock rose or fell after the deal was announced?

5. Expected Benefits Realized. How can you determine whether or not the anticipated benefits were realized?
Special Problems of doing Business Internationally
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?
What are some ways in which an international company can protect itself from any adverse effects of or risks from the issues chosen in h. above, giving specific examples from your specific companies?
6. Conclusion
7. Reference:

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In accordance to BrainMass rules this is not a completion of assignment but background help.

2. Price Paid What are the factors used in determining the price paid? What are the pros and cons of merging or acquiring another company?
For each Glaxo Wellcome ordinary share - 1 GlaxoSmithkline ordinary share was given and for each SmithKline Beecham ordinary share - 0.4552 Glaxo SmithKline ordinary shares were given.
For the American Depository receipts, each Glaxo Welcome ADS - 1 Glaxo SmithKline ADS for each SmithKline Beecham Ads - 1.139 Glaxo SmithKline ADS was given.
The most important factor that was used in determining the price paid was the market price of the shares of both the companies and the price at which the shareholders would agree to the merger.
The shareholder approval is the most important factor that was required for the merger.
Pros of acquisition:
1. Decrease in cost:
2. Larger number of outlets;
3. More employees;
4. Greater market share;
5. Economies of scale;
6. Spreads risks:
Cons of acquisition:
1. A diseconomy of scale as the business becomes too large:
2. Clash of culture between the two companies;
3. Conflict of objectives;
4. Need to fire workers.

3. Measurements of Success How can you determine whether this deal was considered a success or failure, and why? The factors that can be used to evaluate the success of the deal is to examine the growth, market share increases, R&D advances and ...

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