One amongst the most promising approaches used by businesses to elevate or strengthen their competitive positions in the market includes engaging in mergers and acquisitions (Hill & Jones, 2011). In a bid to foster understanding of these among other affiliated factors, the paper intends to review practical experiences from renowned companies and relate them to the concepts. Therefore, the paper comprises of a brief overview of the article chosen and an analysis of the same regarding the concepts learned.
First, the article incorporates an array of mergers, acquisitions, and even disclosures cases all of which are developed to ensure that the companies gain a better position in the market (. It incorporates approximately four different cases in which the companies involved are seeking alternatives towards being absolute performers in their correspondent industries.
The article first presents a merger between AMC Entertainment and Carmike Cinemas, Inc. (Notable Mergers and Acquisitions, 2016). The two companies are alleged to have merged where AMC is entitled to acquire all outstanding shares that belong to Carmike at the price of 30 dollars per share. It articulates that the entirety of the transaction is expected to be valued at an approximate value of 1.1 billion dollars. In a bid to justify the decision made by the two companies, the article outlines a series of benefits of engaging in a merger transaction.
Further, the article depicts a case where two companies engaged in an acquisition exercise. Particularly, Samsonite International S.A expresses its intentions to acquire Tumi Holdings at a rate of 26.75 dollars per share (Notable Mergers and Acquisitions, 2016). The cumulative equity value of the entire transaction is expected to range around 1.8 billion dollars. Further, it provides an account of how much the acquisition decision will benefit the two players taking part in the transaction. In that context, the article provides a rationale for the acquisition.
The third case is where RPM International is said to have acquired Seal-Krete. Seal-Krete is an outstanding company in the manufacturing of concrete care coatings and sealants (Notable Mergers and Acquisitions, 2016). However, the terms of the transaction, in this case, are not disclosed. The article further attempts to acknowledge the extent in which the companies expect to benefit from engaging in the value-addition practice. Finally, the article discusses the intentions of CST Brands, Inc. to increase its intrinsic value. As such, it is in search of the most appropriate approach.
Link between the Article and Lessons Learned
The article provides four different accounts in which different companies are attempting to strengthen their market positions. There is an immense relationship between the article’s content and the lessons learned in the sixth chapter. Notably, the article focuses on giving practical accounts associated with strengthening a company’s market position. Especially, the article concentrates on the essence of seeking a wide scope of operations. There are two categories of scopes that are discussed in the class. In this case, the article focuses on the horizontal scope.
The case between AMC Entertainment and Carmike Cinemas considers acquisition as the best alternative to increasing the firm’s strength in the market (Notable Mergers and Acquisitions, 2016). Particularly, there is a possibility that AMC will benefit as much as the counterpart in the context that AMC will earn a larger scope of operation. Particularly, both companies are likely to have a taste of a wider scope of activity regarding the number of guests. According to the class’s chapter six, acquisitions occur when one firm absorbs the other. The same case applies to the transaction between AMC and Carmike. Another case of an acquisition in the article occurs between Samsonite International S.A and Tumi, Inc.
Just like Chapter six stipulates, the purpose of engaging in acquisitions by the companies is to ensure that each amongst them extend their operations to new markets, new product lines and reduce costs. For instance, AMC benefits through diversifying its footprints via accumulating additional theaters (Notable Mergers and Acquisitions, 2016). That means the company is likely to profit from the complementary guest profiles and geographic scope of operations. The same case applies to the Samsonite International. According to the article, the approach is expected to expand the company’s presence in the “global travel luggage, business bags, and accessories market.”
Another case of acquisition, according to the article, occurs between RPM’s Rust-Oleum Corporation and Seal Krete. The article articulates that the acquisition, just like it is stipulated in Chapter six, influences an expansion of the Rust-Oleum range of the concrete products. Therefore, acquisitions are expected to increase the value of the businesses especially that which acquire the other. However, in the case of CST Inc., the article does not stipulate the particular transaction that the company intends to use in a bid to ensure that its intrinsic value is elevated (Notable Mergers and Acquisitions, 2016). If the knowledge acquired from chapter six is applied in this case, it would be appropriate for the company to consider mergers or acquisitions with successful businesses in the industry (Hill & Jones, 2011).
It is indisputable that there is an excellent relationship between the article’s content and the lesson learned in Chapter six. Acquisitions play an essential role in ensuring that the value of firms is adjusted affirmatively (Hill & Jones, 2011). Most companies that embrace this technique tend to increase their value and ability to control a larger scope of the market. That means an increase in the intrinsic value of these respective companies.
Notable Mergers and Acquisitions 3/4: (CKEC)/(AMC) (TUMI) (RPM) (CST). (2016, March 4). Retrieved from http://www.streetinsider.com/Special+Reports/Notable+Mergers+and+Acquisitions+34%3A+(CKEC)(AMC)+(TUMI)+(RPM)+(CST)/11391279.html
Hill, C., & Jones, G. (2011). Essentials of strategic management. Cengage Learning.