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Mergers and Acquisitions Case Study - Essay Example
Author : jaskolskideonte
Finance & Accounting
Pages 9 (2259 words)
An acquisition refers to instances in which one firm purchases another from its shareholders and gains control of the firm. The paper explores a recent merger and takeover activity within Australia and its impact on shareholder returns and some implications to the theory of the firm as evident in the results…
This paper stresses that the acquisition was not difficult to integrate, and it is improbable that SABMiller would dispose the acquired firm. The paper has established that the acquisition heralded benefits to the SABMiller’s shareholders given that the acquisition aligned with the firm’s strategic priorities, and handed the firm with a leading position in the stable and profitable Australia beer industry. SABMiller expects Foster’s to become a critical part of its business via the application of its commercial capabilities and global scale, as well as by building on the initiatives put in place by Foster’s management. The acquisition of Foster’s is anticipated to be EPS enhancing for SABMiller within the first full year of ownership, and herald economic returns that may exceed the project WACC by year 5. These results align with takeovers being highly motivated by maximization of shareholder wealth. Public mergers and acquisition within Australia are guided by the overriding market activity and requires the regulation of recommended and hostile bids. The regulation encompasses undertaking of due diligence; procedures for announcing and launching an offer.
This report makes a conclusion that the acquisition of Foster’s Group Limited by SABMiller appears to be propelled by the objective of leveraging the synergies within the acquisition process. In order to keep up with growth and changes within the globalized economy, any entity has to pursue the path of growth that contains diverse challenges and issues and overcome them to become a success story. SABMiller, through its indirectly wholly-owned Australian subsidiary, acquisition of Foster’s can be regarded as a case mirroring a company following the path of success. ...