OPPapers.com

Lester

Lester Electronics Financing Alternative Benchmarking
The team researched six companies with similar issues facing Lester Electronics to determine some benchmarking references for Bernard Lester. The six companies researched were: Apollo Health Street/Zavata-Appendix A, AT&T/BellSouth-Appendix B, Safeway-Vons Merger-Appendix C, Oracle-PeopleSoft-Appendix D, Boeing / Mc Donnell Douglas-Appendix E, May Company / Federated-Appendix F. This paper will provide some key concepts that will be compared and contrasted to help Mr. Lester make a determination on how to handle his situation.
"One important reason for acquisitions is that a combined firm may generate greater revenues than two separate firms. Increased revenues may come from marketing gains, strategic benefits, and market power (Ross, 2004, p 802)".
Concepts/Compare and Contrast
In order for the team to make an educated recommendation to Bernard Lester and the LEI board of director researched needed to be accomplished. The team chose six corporations that have been through mergers and takeovers within the last 10 fiscal years. These companies varied in size and industries. The major requirement with the selection process was that one or both of the companies in the merger process was publicly held.
Some of the financial concepts discussed in this paper will be devices and jargon synergy, and patterns of financing. The attached table will illustrate how the companies compare and contrast.

Synergy
All of the companies in our research have financial synergy between each company. "The NPV of an acquisition candidate is the difference between the synergy from the merger and the premium to be paid. We consider the following types of synergy: (1) revenue enhancement, (2) cost reduction, (3) lower taxes, and (4) lower cost of capital. The premium paid
for an acquisition is the price paid minus the market value of the acquisition prior to the merger. The premium depends on whether cash or securities are...