Nina's Fashions Case Study
Nina’s Fashions Inc.
Case Study
There are 7 vital parts to completing this comprehensive analysis of whether Nina’s Fashions and their management should acquire the Chic Company.
1) Gather information regarding mergers and present it to Nina’s board of directors.
2) Discuss reasons and factors justifying mergers, including their benefits to society and each company.
3) Discuss the Pro’s and Con’s of a hostile versus friendly mergers, along with some data on how shareholders from each side have fared in past mergers.
4) Do a sensitivity analysis of all data that was estimated and used in the merger analysis.
5) How to start negotiations, the beginning offer, and the max price per share.
6) Try to justify buying Chic Company using only Nina’s Fashions stock.
7) Recommend whether to proceed with the acquisition.
I. Gather information regarding mergers and present it to Nina’s board of directors.
There are several reasons mergers are appealing to companies. Mergers can diversify company’s interests similar to an individual’s stock portfolio thus reducing its overall risk. Mergers also can serve as a source of growth for a company, instead of a company reinvesting its returns into growing its own company at a rate in which the company can’t handle it can acquire one that has steady growth like itself and grow them both at a reasonable rate. It is also beneficial to companies that merger because they create added value through synergies, economies of scale, and better management.
II. Discuss reasons and factors justifying mergers, including their benefits to society and each company.
Several reasons have been proposed to justify mergers. Among the more prominent are (1) tax considerations, (2) risk reduction, (3) control, (4) purchase of assets at below-replacement cost, (5) synergy, and (6) globalization. Economically justifiable reasons include Synergy: Value of the whole exceeds sum of the parts, Operating economies, financial
Case Study
There are 7 vital parts to completing this comprehensive analysis of whether Nina’s Fashions and their management should acquire the Chic Company.
1) Gather information regarding mergers and present it to Nina’s board of directors.
2) Discuss reasons and factors justifying mergers, including their benefits to society and each company.
3) Discuss the Pro’s and Con’s of a hostile versus friendly mergers, along with some data on how shareholders from each side have fared in past mergers.
4) Do a sensitivity analysis of all data that was estimated and used in the merger analysis.
5) How to start negotiations, the beginning offer, and the max price per share.
6) Try to justify buying Chic Company using only Nina’s Fashions stock.
7) Recommend whether to proceed with the acquisition.
I. Gather information regarding mergers and present it to Nina’s board of directors.
There are several reasons mergers are appealing to companies. Mergers can diversify company’s interests similar to an individual’s stock portfolio thus reducing its overall risk. Mergers also can serve as a source of growth for a company, instead of a company reinvesting its returns into growing its own company at a rate in which the company can’t handle it can acquire one that has steady growth like itself and grow them both at a reasonable rate. It is also beneficial to companies that merger because they create added value through synergies, economies of scale, and better management.
II. Discuss reasons and factors justifying mergers, including their benefits to society and each company.
Several reasons have been proposed to justify mergers. Among the more prominent are (1) tax considerations, (2) risk reduction, (3) control, (4) purchase of assets at below-replacement cost, (5) synergy, and (6) globalization. Economically justifiable reasons include Synergy: Value of the whole exceeds sum of the parts, Operating economies, financial