Mercury Case
Mercury Athletic Footwear Case
Assignment Questions:
1. Is Mercury a good target for AGI? Discuss strategic fit of brands, products, customers, and distribution. Identify specific sources of value. Discuss AGI’s strengths/weaknesses compared with other bidders.
I think Mercury is a good target for AGI:
The brands--the AGI brands and logos are associated with a lifestyle that was prosperous, active and fashion-conscious. The Mercury brands are athletic and casual footwear.
The products--AGI focused on classic products with longer lifestyles, rather than Mercury, who had to keep up with the times and constantly adapted to meet the changing demands and wants of the hip extreme sport and youth.
The customers--Active Gear has core customers as affluent urban and suburban family members aged 25 to 45. While the most loyal purchases of Mercury’s footwear are 15 to 25 years old, with an active interest f sports.
The distribution--they are all in the same shoes industry. Mercury maintains its distribution facilities and has large distribution network. But AGI has to sell through large department and sales stores.
Meanwhile, Mercury does their manufacturing in China like AGI, so Mercury would increase the leverage with contract manufacturers, which can help AGI a lot.
Compare to other bidders, the big difference in days in inventory between AGI and Mercury, which the differing inventory management styles will most likely to weaken the acquisition. Although the manager of AGI believes that AGI’s inventory management system could be adopted by Mercury at little incremental cost. But other bidders can also easily solve the problem.
In summary, the acquisition can make complementary advantages of both sides. Using the DCF model will show if it should be taken or not.
2. Analyse the projections formulated by Liedtke. Are they appropriate? Modify the base case to include synergies as appropriate. Discuss which synergies you have included and why.
The biggest assumption in
Assignment Questions:
1. Is Mercury a good target for AGI? Discuss strategic fit of brands, products, customers, and distribution. Identify specific sources of value. Discuss AGI’s strengths/weaknesses compared with other bidders.
I think Mercury is a good target for AGI:
The brands--the AGI brands and logos are associated with a lifestyle that was prosperous, active and fashion-conscious. The Mercury brands are athletic and casual footwear.
The products--AGI focused on classic products with longer lifestyles, rather than Mercury, who had to keep up with the times and constantly adapted to meet the changing demands and wants of the hip extreme sport and youth.
The customers--Active Gear has core customers as affluent urban and suburban family members aged 25 to 45. While the most loyal purchases of Mercury’s footwear are 15 to 25 years old, with an active interest f sports.
The distribution--they are all in the same shoes industry. Mercury maintains its distribution facilities and has large distribution network. But AGI has to sell through large department and sales stores.
Meanwhile, Mercury does their manufacturing in China like AGI, so Mercury would increase the leverage with contract manufacturers, which can help AGI a lot.
Compare to other bidders, the big difference in days in inventory between AGI and Mercury, which the differing inventory management styles will most likely to weaken the acquisition. Although the manager of AGI believes that AGI’s inventory management system could be adopted by Mercury at little incremental cost. But other bidders can also easily solve the problem.
In summary, the acquisition can make complementary advantages of both sides. Using the DCF model will show if it should be taken or not.
2. Analyse the projections formulated by Liedtke. Are they appropriate? Modify the base case to include synergies as appropriate. Discuss which synergies you have included and why.
The biggest assumption in