Computech Company Case Mergers&Acquisitions
Company Profile of CompuTech Company
Marco Garibaldi was a computer hacker and began to develop computer programs in the basement of his parents’ home. His first software program named as “WordPro” aroused great interest among the academic and the business communities. That was the story behind the establishment of “CompuTech Industries” in 1983. The company went to public in 1990 for the first time. By the end of 1995, CompuTech’s stock price was $25 per share and its outstanding shares were 10,000,000.
CompuTech has developed a solid reputation especially for reliability and timely introduction of new products. Besides, it supplies a toll-free telephone service in order to identify and correct program bugs. Its products are perceived as innovative, easy to use and relatively free from errors. However, diversity of the products offered by the company is limited. CompuTech is expert on just one type of software: word processing and presentation programming. On the other hand, trends in the market are changing so fast, office packages that combine multiple programs and spreadsheets are so popular. Garibaldi thinks that CompuTech should combine its force with another software company, which specializes in accounting, finance and tax return software programs.
Computer Concepts Inc. (CCI) is considered as a potential candidate for the acquisition. CCI went public in 1993 and now it has 2.5 million shares sold with price of $1.25 per share. Management owns 30% of the company. Garibaldi doesn’t know whether management will be willing for merger or not. Yet, he is quite sure that CCI’s managers didn’t have discussions with anyone else about a merger. That’s a good point for CompuTech.
Whether CompuTech should make an offer and if so should it be friendly deal or hostile takeover will be analysed in this paper. Besides from these, there will be suggestions about the value of an offer and how they should make a payment. To sum up, M&A from all dimensions is the
Marco Garibaldi was a computer hacker and began to develop computer programs in the basement of his parents’ home. His first software program named as “WordPro” aroused great interest among the academic and the business communities. That was the story behind the establishment of “CompuTech Industries” in 1983. The company went to public in 1990 for the first time. By the end of 1995, CompuTech’s stock price was $25 per share and its outstanding shares were 10,000,000.
CompuTech has developed a solid reputation especially for reliability and timely introduction of new products. Besides, it supplies a toll-free telephone service in order to identify and correct program bugs. Its products are perceived as innovative, easy to use and relatively free from errors. However, diversity of the products offered by the company is limited. CompuTech is expert on just one type of software: word processing and presentation programming. On the other hand, trends in the market are changing so fast, office packages that combine multiple programs and spreadsheets are so popular. Garibaldi thinks that CompuTech should combine its force with another software company, which specializes in accounting, finance and tax return software programs.
Computer Concepts Inc. (CCI) is considered as a potential candidate for the acquisition. CCI went public in 1993 and now it has 2.5 million shares sold with price of $1.25 per share. Management owns 30% of the company. Garibaldi doesn’t know whether management will be willing for merger or not. Yet, he is quite sure that CCI’s managers didn’t have discussions with anyone else about a merger. That’s a good point for CompuTech.
Whether CompuTech should make an offer and if so should it be friendly deal or hostile takeover will be analysed in this paper. Besides from these, there will be suggestions about the value of an offer and how they should make a payment. To sum up, M&A from all dimensions is the
References: 1. Damodaran, A. (1997). Corporate finance. Canada: John wiley&sons inc. Acquisition Valuation (p.9) 2. 11.12.2011, 14.32, retrieved from http://www.answers.com/topic/synergy 3.11.12.2011, 14.35, retrieved from http://www.mbaknol.com/management-concepts/mergers-and-acquisitions-synergies-through-consolidation/ 4.Engin Küçükkaya, METU Business Administration, Mergers, retrieved from; http://www.ba.metu.edu.tr/user/engin/BA4811/Dividendpolicy.pdf at 10.12.2011, at 12.08 ----------------------- 1