Ivey Publishing

Mergers, Acquisitions, and Other Restructuring Activities

D DePamphilis, D.M.,7/e (United States, Elsevier, 2014)
Prepared By Nicole Davey Makris, PhD Student
Chapter and Title Chapter Matches: Case Information
Chapter 1:
The Mergers and Acquisitions Environment

ACQUISITION AND RESTRUCTURING OF KIA MOTORS BY HYUNDAI MOTORS
Seungwha (Andy) Chung, Sunju Park

Product Number: 9B09M015
Publication Date: 2/9/2009
Length: 16 pages

In recent years, greater competition and diminished profits, due to domestic and global oversupplies as well as higher development costs, have led the automobile industry to engage in domestic and international mergers and strategic collaboration. This case examines one of the largest mergers and acquisitions (M&As) in the Korean automobile market in recent years: the acquisition of Kia Motors (Kia) by Hyundai Motors (Hyundai). The case describes the background conditions of the acquisition, the integration processes after the acquisition, and the requisites for Kia Motors to normalize management within a short time. Hyundai, in acquiring Kia, enhanced its competitive power in both domestic and global markets, achieving economies of scale and scope and strengthening its global market basis. That said, Hyundai/Kia faced several pressing challenges, among them the cooperation of Renault and Samsung Motors, the unclear domestic treatment of Daewoo Motors, and M&As taking place among top motor companies worldwide. This case study asks students to analyze the process of post-acquisition restructuring and the resulting synergy effects, inviting them to think through the strategies by which Hyundai/Kia may thrive in the global automobile market. Further, it illustrates both the current state of the domestic Korean automobile industry and recent trends in the global automobile market.

Teaching Note: 8B09M15 (12 pages)
Industry: Manufacturing
Issues: Restructuring; Mergers & Acquisitions; Organizational Change; Integration; Ivey/Yonsei
Difficulty: 4 - Undergraduate/MBA



RESEARCH IN MOTION: MANAGING EXPLOSIVE GROWTH
Rod E. White, Paul W. Beamish, Daina Mazutis

Product Number: 9B08M046
Publication Date: 5/15/2008
Revision Date: 5/24/2017
Length: 19 pages

Research in Motion (RIM) is a high technology firm that is experiencing explosive sales growth. David Yach, chief technology officer for software at RIM, has received notice of an impending meeting with the co-chief executive officer regarding his research and development (R&D) expenditures. Although RIM, makers of the very popular BlackBerry, spent almost $360 million in R&D in 2007, this number was low compared to its largest competitors, both in absolute numbers and as a percentage of sales (e.g. Nokia spent $8.2 billion on R&D). This is problematic as it foreshadows the question of whether or not RIM is well positioned to continue to meet expectations, deliver award-winning products and services and maintain its lead in the smartphone market. Furthermore, in the very dynamic mobile telecommunications industry, investment analysts often look to a firm's commitment to R&D as a signal that product sales growth will be sustainable. Just to maintain the status quo, Yach will have to hire 1,400 software engineers in 2008 and is considering a number of alternative paths to managing the expansion. The options include: (1) doing what they are doing now, only more of it, (2) building on their existing and satellite R&D locations, (3) growing through acquisition or (4) going global.

Teaching Note: 8B08M46 (19 pages)
Industry: Manufacturing
Issues: Telecommunication Technology; Change Management; Globalization; Staffing; Growth Strategy
Difficulty: 4 - Undergraduate/MBA



CIBC-BARCLAYS: SHOULD THEIR CARIBBEAN OPERATIONS BE MERGED?
Don Wood, Paul W. Beamish

Product Number: 9B04M067
Publication Date: 1/10/2005
Revision Date: 9/21/2011
Length: 17 pages

At the end of 2001, the Canadian Imperial Bank of Commerce (CIBC) and Barclays Bank PLC were in advanced negotiations regarding the potential merger of their respective retail, corporate and offshore banking operations in the Caribbean. Some members of each board wondered whether this was the best direction to take. Would the combined company be able to deliver superior returns? Would it be possible to integrate, within budget, companies that had competed with each other in the region for decades? Would either firm be better off divesting regional operations instead? Should the two firms just continue to go-it-alone with emphasis on continual improvement? A decision needed to be made within the coming week. This case may be taught on a stand alone basis or in combination with any of the six additional Cross-Enterprise cases that deal with the various functional issues associated with the actual merger: Accounting and Finance - CIBC-Barclays: Accounting for Their Merger, product 9B04B022, Information Systems - Information Systems at FirstCaribbean: Choosing a Standard Operating Environment, product 9B04E032, Marketing and Branding - FirstCaribbean International Bank: The Marketing and Branding Challenges of a Start-up, product 9B05A012, Human Resources - Harmonization of Compensation and Benefits for FirstCaribbean International Bank, product 9B04C053, Finance - FirstCaribbean Merger: The Proposed Merger, product 9B06N004, and technical note - Note on Banking in the Caribbean, product 9B05M015.

Teaching Note: 8B04M67 (8 pages)
Industry: Finance and Insurance
Issues: Corporate Strategy; Emerging Markets; Mergers & Acquisitions; Integration; University of West Indies
Difficulty: 4 - Undergraduate/MBA


Chapter 2:
The Regulatory Environment

OLYMPUS AND THE WHISTLEBLOWER PRESIDENT
Seijiro Takeshita, Christopher Williams

Product Number: 9B12M012
Publication Date: 2/24/2012
Revision Date: 2/24/2012
Length: 13 pages

The newly appointed president and chief operating officer of Olympus Corporation of Japan was called to an emergency board meeting. The purpose of the meeting was to discuss governance issues regarding corporate mergers and acquisitions. However, it would be no ordinary meeting. Since assuming the role of president in April 2011, the president had discovered evidence of corporate fraud on a large scale. He had commissioned an external auditor report that showed a significant loss of shareholder value. His call for changes to be made to the Japanese board of directors had been met by resistance. How should he plan for the meeting? What could he expect? What position should he take? How should he influence decisions regarding the company’s immediate problems and its longer-term corporate governance?

Teaching Note: 8B12M012 (10 pages)
Industry: Manufacturing
Issues: Corporate Governance; Fraud; Crisis; Japan
Difficulty: 4 - Undergraduate/MBA



CHINA MINMETALS CORPORATION AND NORANDA INC.
Isaiah A. Litvak

Product Number: 9B06M013
Publication Date: 2/6/2006
Revision Date: 10/26/2011
Length: 16 pages

The proposed takeover of Noranda Inc. (one of the biggest mineral players in the world) by the Chinese state owned enterprise, China Minmetals Corporation, was cause for Canadian government concern as it required some understanding about the workings and objectives of state owned enterprises. There was particular concern around the labour issues and human rights violations in China, and the possible impact of these on the proposed takeover. Equally important, Canada ran the substantial risk of sending the wrong message to the People's Republic of China if it was to block such a takeover, and in some respects, to be seen as shutting its doors to one of the world's largest and most powerful emerging economies.

Teaching Note: 8B06M13 (13 pages)
Industry: Mining, Quarrying, and Oil and Gas Extraction
Issues: China; Government and Business; Ethical Issues; Business and Society; Politics
Difficulty: 4 - Undergraduate/MBA



BOWATER'S ACQUISITION OF ALLIANCE FOREST PRODUCTS: CONSOLIDATION IN THE FOREST PRODUCTS INDUSTRY
David W. Conklin, Danielle Cadieux

Product Number: 9B02M046
Publication Date: 2/6/2003
Revision Date: 12/3/2009
Length: 23 pages

The takeover of Alliance Forest Products by United States-based Bowater Inc. resulted in job loss for members of the Canadian board of directors and head office staff as well as loss of corporation shares from the Toronto Stock Exchange. Bowater's strategy to reduce costs and enhance productivity may result in additional Canadian job losses in the future. Corporations in the forest products industry are merging or acquiring companies to stay competitive. These mergers are a public policy concern for both Canada and the United States. The frequency and the size of the mergers raise concerns whether antitrust and competition policies should be used to restrain the price increases that the consolidation might entail.

Teaching Note: 8B02M46 (13 pages)
Industry: Agriculture, Forestry, Fishing and Hunting
Issues: Globalization; International Business; Business Policy
Difficulty: 4 - Undergraduate/MBA


Chapter 3:
The Corporate Takeover Market

VOSSLOH: RESTORING TRUST AFTER TWO CONSECUTIVE PROFIT WARNINGS
Jan Diebecker, Alexander Flügel, Thorsten Knauer, Tea Luhtanen, Friedrich Sommer

Product Number: 9B12M113
Publication Date: 2/7/2013
Revision Date: 2/6/2013
Length: 17 pages

Vossloh AG is preparing for its annual December conference with investors and analysts. The company, whose core business has always been the railway engineering sector, had to issue two consecutive profit warnings in 2011, which sent its stock back to levels last seen only in the aftermath of the economic crisis of 2009–10. The company’s primary task is to find the right arguments to satisfy the conference participants and regain their trust. Vossloh’s business units, relevant business environments, and problems such as stock developments and the threat of hostile takeover are discussed. One of the basic issues is whether Vossloh should focus on the still very important home countries in Europe and further strengthen its attempts to increase its share in niche markets or focus more on emerging markets in Asia, South America and eastern Europe.

Teaching Note: 8B12M113 (12 pages)
Industry: Construction
Issues: Profit warning; stakeholder trust; hostile takeover; Germany
Difficulty: 4 - Undergraduate/MBA



CHINA MINMETALS CORPORATION AND NORANDA INC.
Isaiah A. Litvak

Product Number: 9B06M013
Publication Date: 2/6/2006
Revision Date: 10/26/2011
Length: 16 pages

The proposed takeover of Noranda Inc. (one of the biggest mineral players in the world) by the Chinese state owned enterprise, China Minmetals Corporation, was cause for Canadian government concern as it required some understanding about the workings and objectives of state owned enterprises. There was particular concern around the labour issues and human rights violations in China, and the possible impact of these on the proposed takeover. Equally important, Canada ran the substantial risk of sending the wrong message to the People's Republic of China if it was to block such a takeover, and in some respects, to be seen as shutting its doors to one of the world's largest and most powerful emerging economies.

Teaching Note: 8B06M13 (13 pages)
Industry: Mining, Quarrying, and Oil and Gas Extraction
Issues: China; Government and Business; Ethical Issues; Business and Society; Politics
Difficulty: 4 - Undergraduate/MBA



SHIRE PHARMACEUTICALS GROUP'S ACQUISITION OF BIOCHEM PHARMA: BROADENING PRODUCT PORTFOLIO
David W. Conklin

Product Number: 9B03M034
Publication Date: 8/8/2003
Revision Date: 10/22/2009
Length: 17 pages

Throughout the world, pharmaceutical companies were merging in order to achieve economies of scale in all of their activities, from research and product development through to distribution and marketing. While BioChem had several successful products and a track record of rapid expansion, nevertheless, in this new global environment it was now necessary for BioChem to achieve economies of scale through a consolidation of some type. The U.K. firm Shire was approximately the same size as BioChem, and faced the same dilemma. In a sense, Shire's acquisition of BioChem was a merger rather than a takeover and both corporations could achieve a unified global strategy that was beyond the means of each individually.

Teaching Note: 8B03M34 (9 pages)
Industry: Manufacturing
Issues: Business Policy; International Business
Difficulty: 4 - Undergraduate/MBA


Chapter 4:
Planning: Developing Business and Acquisition Plans

DOW'S ACQUISITION PROGRAM
Koen H. Heimeriks, Stephen Gates

Product Number: 9B10M058
Publication Date: 9/30/2010
Revision Date: 6/26/2014
Length: 23 pages

This case illustrates how Dow Chemical acquired and integrated Wolff Walsrode, a German specialty chemicals firm that was part of the Bayer Group. This acquisition, combined with Dow's existing cellulosics unit, helped it create a new specialty business with a forecasted $1.1 billion in annual sales and strengthen its footprint in Central and Eastern Europe.

The main challenge in this case concerns the complexities of acquisition integration, which are demanding in spite of Dow's extensive experience and track record. Dow is confronted with various integration challenges and faces several decisions concerning the degree and speed of integration of Wolff Walsrode and one of its units, Probis. The decisions pit considerations of rapid cost synergy capture via leveraging global systems platforms against process technology transfer and accommodating different customers and their requirements. Along with providing a review of the importance of a multitude of codified implementation templates and tacit integration mechanisms, this case illustrates how Dow's M&A integration personnel prove their worth by ensuring Wolff's successful integration.


Teaching Note: 8B10M58 (20 pages)
Industry: Manufacturing
Issues: Mergers & Acquisitions; Integration; Cross-border Merger & Acquisition Integration; Target Acquisition Integration; United States; Germany
Difficulty: 4 - Undergraduate/MBA



ALCAN (A): ANTICIPATING INDUSTRY CHANGE
Gregory Vit, Johnny Boghossian, Amrita Nain, Karl Moore

Product Number: 9B09M071
Publication Date: 12/8/2009
Length: 18 pages

In December 2006, Alcan was the second largest producer of aluminum in the world, but the industry was consolidating. The case traces the development of the aluminum industry since World War II to the recent emergence of China as an economic power and the accompanying rise in commodity prices. Alcan had to decide between two offers: to be acquired or to go it alone. The first offer was from Alcoa and the other from Rio Tinto. Alcoa was the world leader in the production of aluminum and, like Alcan, was engaged in significant technological research and development. Meanwhile, Rio Tinto was one of the largest mining companies in the world, but had minor aluminum operations and, in general, few downstream processing plants or technologies. Students are asked to identify Alcan's key resources and consider which strategy would make best use of them.

Teaching Note: 8B09M71 (6 pages)
Industry: Mining, Quarrying, and Oil and Gas Extraction
Issues: Government and Business; Strategy and Resources; Globalization; Mergers & Acquisitions
Difficulty: 4 - Undergraduate/MBA



TATA MOTORS' ACQUISITION OF DAEWOO COMMERCIAL VEHICLE COMPANY
Meera Harish, Sanjay Singh, Kulwant Singh

Product Number: 9B08M094
Publication Date: 2/2/2009
Revision Date: 5/3/2017
Length: 15 pages

In January 2004, the chairman of the India-based Tata Group, announced that the Tata Group would focus its efforts on international expansion to become globally competitive. This largely domestic vehicle manufacturing firm subsequently acquired a leading established South Korean firm, Daewoo Commercial Vehicle Company (DCVC). This case focuses on the background of the firms and the acquisition, and the bidding and acquisition process. It provides information on the interests of the acquirer and target, and how both came to see the value in the acquisition. The Tata Group acquisition presents an uncommon situation of how an Indian firm acquired a firm in South Korea while overcoming a series of cultural and other barriers. An analysis of this case provides the basis for determining what criteria should be considered to guide a successful acquisition. A companion case is also available, Tata Motors' Integration of Daewoo Commercial Vehicle Company.

Teaching Note: 8B08M94 (10 pages)
Industry: Manufacturing
Issues: International Strategy; International Expansion; Management Decisions; Market Entry; Mergers & Acquisitions; Corporate Strategy; Business Policy
Difficulty: 4 - Undergraduate/MBA



VINCOR AND THE NEW WORLD OF WINE
Paul W. Beamish, Nikhil Celly

Product Number: 9B04M001
Publication Date: 1/14/2004
Revision Date: 11/18/2014
Length: 17 pages

Vincor International Inc. was Canada's largest wine company and North America's fourth largest in 2002. The company had decided to internationalize and as the first step had entered the United States through two acquisitions.The company's chief executive officer felt that to be among the top 10 wineries in the world, Vincor needed to look beyond the region. To the end, he was considering the acquisition of an Australian company, Goundrey Wines. He must analyze thestrategic rationale for the acquisition of Goundrey as well as to probe questions of strategic fit and value.

Teaching Note: 8B04M01 (14 pages)
Industry: Manufacturing
Issues: Internationalization; Market Entry; Acquisitions; Growth Strategy
Difficulty: 4 - Undergraduate/MBA


Chapter 5:
Implementation: Search Through Closing

HSBC - THE BITAL ACQUISITION
Jeffrey Gandz, Allen Morrison, David Barrett

Product Number: 9B04N012
Publication Date: 9/20/2004
Revision Date: 10/15/2009
Length: 17 pages

HSBC is one of the largest and most global financial institutions in the world. The company has identified Bital, Mexico's fourth largest bank, as a potential acquisition target. Negotiations have come down to the wire, and the controlling Mexican shareholders are trying to get HSBC to raise its offer. Is it worth it? HSBC must decide on both strategic and short-term financial criteria under some degree of uncertainty as illuminated by a due diligence process. The HSBC executive who has handled the acquisition at a local level, and would be chief executive officer of HSBC Mexico should the deal go ahead, is assessing the pros and cons of the acquisition and must also identify the priorities which he and his team would have to address, including culture change issues, re-branding Bital as HSBC Mexico, personnel issues and maintaining the continuity of the business.

Teaching Note: 8B04N012 (11 pages)
Industry: Finance and Insurance
Issues: Brand Positioning; Cross Cultural Management; Multinational; Acquisition Strategy
Difficulty: 4 - Undergraduate/MBA



PACIFIC CENTURY CYBERWORKS (A): CONNECTING TO THE WORLD
Andrew Karl Delios, Dennis Lai

Product Number: 9B00M031
Publication Date: 9/18/2000
Revision Date: 1/11/2010
Length: 18 pages

Pacific Century Cyberworks (PCCW), a Hong Kong-based Internet company, emerged from an insignificant position since its mid-1999 listing to be a leading Internet player in Asia and China in early 2000. To achieve its growth, PCCW has followed an aggressive acquisition strategy providing it with ownership positions in a multitude of Internet ventures. The case is positioned at the time of PCCW's largest potential acquisition - Hong Kong Telecom - the fourth largest company in Hong Kong. Students will see how a new entrant to a rapidly growing industry can quickly establish an important presence; learn about competitive advantage in the Internet industry; and, look at the structure of the Internet industry from the perspective of a company that provides an integrated range of services to consumers. A 'B' case is available (product 9B00M032), describing the situation faced by PCCW several months after the announcement of its merger with Hong Kong Telecom.

Teaching Note: 8B00M31 (14 pages)
Industry: Administrative, Support, Waste Management and Remediation Services
Issues: China; Strategy Development; Vertical Integration; Internet; Corporate Strategy
Difficulty: 4 - Undergraduate/MBA


Chapter 6:
Postclosing Integration: Mergers, Acquisitions, and Business Alliances

ARCELORMITTAL (A)
Jean-Louis Schaan, Ramasastry Chandrasekhar

Product Number: 9B10M001
Publication Date: 4/12/2010
Revision Date: 4/13/2010
Length: 15 pages

From the perspectives of the senior executive of Mittal and the senior executive of Arcelor, this case looks at post-merger integration. As with many mergers, the ArcelorMittal merger was touted as a merger of equals. Unlike most, it was actually managed as such and it worked. The case series looks at three critical decision points (one for each case) and challenges that the two senior executives faced from the line organization during the execution of the integration. Also see supplemental cases ArcelorMittal (B), product #9B10M002 and ArcelorMittal (C), product #9B10M003.

Teaching Note: 8B10M001 (14 pages)
Industry: Manufacturing
Issues: Global Strategy; Post-merger Integration; Strategy and Structure
Difficulty: 4 - Undergraduate/MBA



MERGING ESSO ICELAND AND BILANAUST (A)
Gerard Seijts, Ken Mark

Product Number: 9B10C015
Publication Date: 9/24/2010
Revision Date: 12/12/2011
Length: 9 pages

In 2006, Hermann Gudmundsson (the chief executive officer [CEO] of Bilanaust, an Icelandic automotive spare parts retailer) was part of a group of partners that had purchased Esso Iceland. He had subsequently been appointed to the CEO position at Esso Iceland. The two companies were quite different: Bilanaust dealt with real-time customer needs, carried a wide range of products, and enjoyed a rising market share and profits. Esso Iceland was 12 times the size of Bilanaust, skilled at developing and executing medium- to long-term strategies, and was operating in a stagnated market. Gudmundsson evaluated the opportunities in front of him: could a successful merger be wrought from the two companies or would it be better to maintain two separate entities? He determined that a lot of work would need to be done to gain consensus around the right strategic direction for the future. Careful thought identified three areas of initial focus: 1) improving staff morale; 2) creating a sense of optimism; 3) placing effective leaders at key points in the organization.

Teaching Note: 8B10C015 (21 pages)
Issues: Communications; Mergers & Acquisitions; Leadership; Corporate Culture; Strategy Development; Branding; Strategic Planning; Financial Crisis
Difficulty: 4 - Undergraduate/MBA



PACIFIC CENTURY CYBERWORKS (B): BROADBAND ACCESS ACROSS ASIA
Andrew Karl Delios, Dennis Lai

Product Number: 9B00M032
Publication Date: 9/25/2000
Revision Date: 1/11/2010
Length: 5 pages

The post-merger situation for Pacific Century CyberWorks (PCCW) and Hong Kong Telecom is detailed in this case. The stock prices of Pacific Century CyberWorks (PCCW) have fallen drastically in the months following the announcement of the merger. Discussions can be based on the post-merger developments; competitive developments in the broadband industry post-merger; and, how stock prices reflect the market's reaction to a company's strategy. The points raised in Pacific Century CyberWorks (A) (product 9B00M031) are reinforced in this concise case, which can be introduced and read in class.

Teaching Note: 8B00M31 (14 pages)
Industry: Administrative, Support, Waste Management and Remediation Services
Issues: China; Corporate Strategy; Strategy Development; Internet; Vertical Integration
Difficulty: 4 - Undergraduate/MBA


Chapter 7:
Mergers and Acquisitions Cash Flow Basics

FROZEN FOOD PRODUCTS: COST OF CAPITAL
S.K. Mitra

Product Number: 9B12N028
Publication Date: 11/22/2012
Revision Date: 11/20/2012
Length: 6 pages

Maria D’souza planned to expand her business by introducing a new product line of frozen foods. She wanted to estimate the attractiveness of the new expansion by estimating net present value (NPV) of the expected cash flows. Her main concern was to find a suitable discount rate to be applied to cash flows to ascertain the NPV of the project.

D’souza’s consultant friend asked her to analyze cost of capital of similar companies operating in the same industry. The basic principle in this case is that firms in the same industry often have similar customers, operations and assets; therefore they have similar business risks and should have similar costs of capital.


Teaching Note: 8B12N028 (8 pages)
Industry: Accommodation & Food Services
Issues: Cost of capital; capital structure; net asset value; discounting rate; India
Difficulty: 5 - MBA/Postgraduate



NEWGRADE ENERGY INC.
James E. Hatch, Saqib A. Khan

Product Number: 9B09N007
Publication Date: 5/14/2009
Length: 12 pages

In April 2007, the senior vice-president and chief financial officer (CEO) of Crown Investments Corporation of Saskatchewan (CIC) was faced with a challenging decision. CIC was contemplating the sale of 50 per cent interest in a heavy oil upgrader and wanted an assessment of the worth of the company. To obtain a reasonable estimate, the CEO had instructed an independent advisor with industry experience to provide input. In addition to receiving an estimate of value (based on the methods of free cash flow, comparables and precedent transactions), the CEO also had to formulate a strategy for selling off the company.

Teaching Note: 8B09N07 (11 pages)
Industry: Manufacturing
Issues: Valuation; Hill
Difficulty: 4 - Undergraduate/MBA


Chapter 8:
Relative, Asset-Oriented, and Real-Option Valuation Basics

PURSUING CADBURY (A)
Stewart Thornhill, Ken Mark

Product Number: 9B12M053
Publication Date: 5/4/2012
Revision Date: 5/4/2012
Length: 21 pages

Keith Palmerston, managing director at PKG Capital, is thinking about what to do with his firm’s holdings in Kraft Foods. In early 2010, Kraft, primarily a grocery products firm, is trying to acquire Cadbury, a well-known U.K.-based chocolate manufacturer. Palmerston is trying to determine if Cadbury is a good fit for Kraft’s operations and if the transaction will generate value for shareholders. This case can be used in a strategy course as part of a negotiations module for strategic analysis, and to discuss the topic of valuation.

Teaching Note: 8B12M053 (7 pages)
Industry: Retail Trade
Issues: Mergers & Acquisitions; Strategic Change; Strategy Development; Valuation; Negotiation; Chocolate; United Kingdom
Difficulty: 4 - Undergraduate/MBA



MELCO ENTERTAINMENT LIMITED
Neil Brisley, Dave Gregory, Ron Mandel

Product Number: 9B08N016
Publication Date: 7/4/2008
Length: 10 pages

Melco is a gaming firm based in Macau. Melco is planning an initial public offering (IPO) but receives a takeover bid from MGM Mirage. How much was the company really worth? Which route was best for Melco shareholders? Students assume the role of the investment banker advising Melco's chief executive officer on how to react. The case permits the valuation of the firm using discounted cashflow methods and relative valuation. Also, consideration of strategic issues, industry buyer versus IPO, potential synergies, ownership and control issues are involved.

Teaching Note: 8B08N16 (9 pages)
Industry: Other Services
Issues: China; Valuation; Take-over Bids; Gambling; Strategic Planning
Difficulty: 4 - Undergraduate/MBA



NATIONAL IR: CATALYST INVESTMENTS ACQUISITION OF MONTREAUX
Basil A. Kalymon, Robert Jaques

Product Number: 9B02N023
Publication Date: 4/2/2003
Revision Date: 12/5/2009
Length: 20 pages

National IR is a large communications consulting firm. The firm is working with a client, Catalyst Investment, in preparation of a hostile takeover bid. A senior consultant with National IR must determine if the acquisition price offer is appropriate, the perceptions of value by shareholder investors, assessment of investor reaction to alternative deal structures and assessment of the public reaction to acquisition strategies in a politicized environment to create a communication strategy for investors.

Teaching Note: 8B02N23 (10 pages)
Industry: Administrative, Support, Waste Management and Remediation Services
Issues: Valuation; Investor Relations; Take-over Bids; Acquisition Strategy
Difficulty: 5 - MBA/Postgraduate


Chapter 9:
Applying Financial Models

IFCI: THE FALL AND THE NEED FOR REVIVAL
Shailendra Kumar Rai, C.P. Gupta, S. Ravi

Product Number: 9B13N026
Publication Date: 12/19/2013
Revision Date: 12/18/2013
Length: 22 pages

After independence in 1947, the government of India founded the Industrial Finance Corporation of India as the first development financial institution to provide medium- and long-term loans to public limited companies and cooperative societies engaged in productive activities. Then in 1991, the government’s New Economic Policy opened the door to liberalization, privatization and globalization of the Indian economy. The company was restructured and incorporated in 1993 but was unable to diversify its business model from project financing to other financial services. By 2004, it had almost collapsed; its profitability had become negative. Non-performing assets had reached their peak, and the company did not have money to do business. It began selling off and/or renting out its premises, going door-to-door to save its future, and employee morale hit rock bottom. The business had become unsustainable and unviable. With this as backdrop, the board of directors needs to decide on the company’s future. What is their best option: liquidation, restructuring, merger or strategic partnership?

Teaching Note: 8B13N026 (19 pages)
Industry: Finance and Insurance
Issues: Accounting; restructuring; financial institutions; India
Difficulty: 5 - MBA/Postgraduate



BAFFINLAND IRON MINES CORPORATION
Craig Dunbar, David Wood, Ken Mark

Product Number: 9B12N029
Publication Date: 12/17/2012
Revision Date: 12/17/2012
Length: 24 pages

Partners in Nunavut Iron Ore Acquisition Inc. (Nunavut), an entity that had been set up to bid for control of Baffinland Iron Mines Corporation (Baffinland), are forced to respond to a rival bid. Baffinland owned the Mary River project, one of the most significant iron ore reserves in Canada, and had been trying to develop the project since 2004, but the number of prospective mining and financing partners declined following the onset of the global financial crisis in 2007. Baffinland’s share price tumbled as a result of its inability to move the project forward, falling from over $4.68 in October 2007 to $0.17 cents in 2008. In September 2010, sensing an opportunity to pick up an asset at a distressed price, Nunavut, backed by a private equity firm in the United States, had sparked a bidding war for Baffinland against ArcelorMittal, a Belgium-based steel company.

Teaching Note: 8B12N029 (15 pages)
Industry: Mining, Quarrying, and Oil and Gas Extraction
Issues: Valuation; Synergies; Mergers and Acquisitions; Game Theory; Canada
Difficulty: 4 - Undergraduate/MBA



ALCAN (B): REACTING TO THE ALCOA OFFER
Johnny Boghossian, Karl Moore, Amrita Nain, Gregory Vit

Product Number: 9B09N024
Publication Date: 12/8/2009
Length: 12 pages

In May 2007, aluminum giant Alcoa announced its intentions to perform a hostile takeover of Alcan. Case B is set at this point and before Rio Tinto was in a position to announce its own offer. Students are asked to perform valuations of Alcan to determine the premium offered by Alcoa, consider the strategies Alcan can employ, and supply the suggestions Alcan managers should provide shareholders.

Teaching Note: 8B09N24 (6 pages)
Industry: Mining, Quarrying, and Oil and Gas Extraction
Issues: Strategy and Resources; Globalization; Mergers & Acquisitions; Government and Business
Difficulty: 4 - Undergraduate/MBA


Chapter 10:
Analysis and Valuation of Privately Held Firms

LISCO ACQUISITION OF A MINORITY INTEREST OF ORION
Richard Howard, Kimberley Howard

Product Number: 9B13N008
Publication Date: 6/12/2013
Revision Date: 7/27/2017
Length: 11 pages

A wealth management company in Chile that provided financial advisory services to high net worth individuals and pension funds was at a crossroads. After 15 years in business, the company had become very successful. To increase its value without incurring undue corporate financial risk, the owner, who has invested most of his personal wealth in the company, has the opportunity to make an investment in a similar wealth management company in Colombia. What are the risks and rewards of such a complex international merger and acquisition for this medium-sized enterprise operating in an uncertain political and economic environment?

Teaching Note: 8B13N008 (13 pages)
Industry: Finance and Insurance
Issues: Company valuation; minority acquisitions; Chile; Colombia
Difficulty: 4 - Undergraduate/MBA



OXFORD LEARNING CENTRES INC.: THE CHILDTIME ALTERNATIVE
Craig Dunbar

Product Number: 9A98N013
Publication Date: 4/30/1999
Revision Date: 11/17/2011
Length: 14 pages

Canada-based Oxford Learning Centres (OLC) entered into a licensing agreement with U.S.-based Childtime Learning Centers (Childtime) where Childtime would operate OLC supplemental education programs in their facilities. In less than six months, Childtime decided to make an offer to purchase OLC. OLC's CEO must decide how to approach the impending negotiations. The case describes the North American supplement education industry, valuation considerations and private firm purchase negotiations. Detailed comparables are provided for such firms as Sylvan Learning Systems and Corporate Family Solutions. The case provides an opportunity to apply a number of valuation techniques including discounted cash flow, and multiples based on comparable firms and transactions.

Teaching Note: 8A98N13 (12 pages)
Industry: Educational Services
Issues: Mergers & Acquisitions; Joint Ventures; Education; Valuation
Difficulty: 4 - Undergraduate/MBA


Chapter 11:
Structuring the Deal: Payment and Legal Considerations

PROPOSED MERGER OF PERDIGÃO AND SADIA
James E. Hatch, Deborah Terayama

Product Number: 9B12N005
Publication Date: 4/19/2012
Revision Date: 4/23/2012
Length: 20 pages

In April 2009, Perdigão was contemplating the acquisition of Sadia and a merger of the two companies. The intended share-swap transaction between two of Brazil’s biggest food companies would allow Perdigão to dramatically grow its domestic and international market share, and become one of the world’s largest players in the food production industry, while driving up profit margins by benefiting from synergies. However, Sadia had very significant short and long debt that it was unlikely to be able to service. Students must determine whether Perdigão should acquire Sadia and the basis of the proposed share exchange, and assess whether the resulting debt burden of the combined companies is manageable.

Teaching Note: 8B12N005 (15 pages)
Industry: Retail Trade
Issues: Mergers and Acquisitions; Discounted Cash Flow; Risk; Weighted Average Cost of Capital; Food Production; Brazil
Difficulty: 4 - Undergraduate/MBA



HAVELLS INDIA: THE SYLVANIA ACQUISITION DECISION
Charles Dhanaraj, Kavil Ramachandran, Swetha Dasari

Product Number: 9B09M089
Publication Date: 11/11/2009
Revision Date: 12/21/2011
Length: 13 pages

This case presents the management challenges of a high-growth manufacturing company based in India that is contemplating a major international acquisition. Its decision will involve both geographic and product diversification. Students have to grapple with the trade-offs of an exciting growth opportunity that can bring the company to new heights against significant risks and challenges that such an acquisition would entail. The case also provides an excellent context for studying the evolution of international strategy in a firm, as it shows Havells growing from an entrepreneurial start-up trading company to a successful manufacturing firm and then a global company.

Teaching Note: 8B09M89 (10 pages)
Industry: Manufacturing
Issues: International Acquisition; Mergers & Acquisitions; Growth Strategy; Diversification; India; Ivey/ISB
Difficulty: 4 - Undergraduate/MBA



FIRSTCARIBBEAN: THE PROPOSED MERGER
Stephen Sapp

Product Number: 9B06N004
Publication Date: 11/28/2005
Revision Date: 9/23/2009
Length: 18 pages

This case provides students with an abridged version of the Offering Circular provided to investors for the proposed merger of the Caribbean operations of two international banks. Taking the perspective of an investment advisor, students are asked to evaluate the proposed merger and make a recommendation to the existing shareholders regarding how they should manage this investment going forward (i.e. sell or hold the shares in the new company). Students will discuss several of the issues involved in valuing international companies using somewhat limited data and puts them in the position of assessing the value of the proposal to existing shareholders.

Teaching Note: 8B06N04 (6 pages)
Industry: Finance and Insurance
Issues: Valuation; Mergers & Acquisitions; Investment Analysis; International Business
Difficulty: 4 - Undergraduate/MBA


Chapter 12:
Structuring the Deal: Tax and Accounting Considerations

CIBC-BARCLAYS: ACCOUNTING FOR THEIR MERGER
Archibald Campbell, Noel Reynolds

Product Number: 9B04B022
Publication Date: 3/7/2005
Revision Date: 10/8/2009
Length: 12 pages

The Canadian Imperial Bank of Commerce (CIBC) and Barclays Bank PLC have signed an agreement to combine their retail, corporate and offshore banking operations in the Caribbean to create FirstCaribbean International Bank. In principle, it appeared that both parties were agreeing to a combination of their assets to form a new entity, in which case a new holding company could be constituted to absorb the assets being merged. Alternately, as Barclays interest in the merger was substantially greater than that of CIBC, the transaction could be construed as an outright purchase of the CIBC interests by Barclays. The problem with this second approach, however, was that Barclays Caribbean presently had no separate legal form in the region. This case illustrates the procedures for accounting for mergers and acquisition, and lends itself to discussion on a myriad of issues and concepts. This case may be taught on a stand alone basis or in combination with any of the four additional cases which deal with various functional issues regarding the actual merger/integration which occurred. The four additional cases are Harmonization of Compensation and Benefits for FirstCaribbean Bank, product 9B04C053; Information Systems at FirstCaribbean: Choosing a Standard Operating Environment, product 9B04E032; CIBC-Barclays: Should Their Caribbean Operations be Merged?, product 9B04M067; and Note on Banking in the Caribbean, product 9B05M015.

Teaching Note: 8B04B22 (10 pages)
Industry: Finance and Insurance
Issues: Accounting - Tax; Accounting - Transactions; Mergers & Acquisitions; Integration; University of West Indies
Difficulty: 4 - Undergraduate/MBA



DAIMLERCHRYSLER: POST-MERGER NEWS
Pratima Bansal, Doug Airey, Andy Gepp, Cathy Harris, Yves Menard

Product Number: 9B03M049
Publication Date: 9/25/2003
Revision Date: 10/22/2009
Length: 17 pages

Daimler-Benz AG, a large automobile manufacturer in Europe and the Chrysler Corporation, one of the Big Three auto makers in North America have merged to create DaimlerChrysler. On the surface, everything seemed to be going as planned. In reality, all was not well. Organizational changes, conflicting information, and doubts about the future structure of the company resulted in the departure of numerous Chrysler employees, including many mid-level managers and engineers. While initially amalgamated into Daimler, the Chrysler Group ended up as one of three separate automotive divisions. In 2001, DaimlerChrysler recorded a $1.2 billion loss in operating profit (before one-time effects). Estimates for 2002 called for a break-even result, but the company was facing a $9 billion lawsuit filed by the fifth largest shareholder, who claimed that Daimler had deceived investors by touting the venture as a merger of equals.

Teaching Note: 8B03M49 (10 pages)
Industry: Retail Trade
Issues: Consolidations and Mergers; Mergers & Acquisitions; International Accounting
Difficulty: 4 - Undergraduate/MBA


Chapter 13:
Financing the Deal

MELCO CROWN ENTERTAINMENT: ROLLING THE DICE AND OTHER WAYS TO RAISE CAPITAL
Stephen Sapp, Matthew Gray

Product Number: 9B12N018
Publication Date: 8/31/2012
Revision Date: 2/13/2014
Length: 15 pages

The case deals with how the investment banker advising the chief financial officer of Melco Crown Entertainment Limited (MCEL), a casino and entertainment company based in Macau, will suggest the company finance two new gaming resorts currently under construction. The development of these properties has stopped because of insufficient funding, and project timelines have started to be questioned. A decision regarding the best means to raise the necessary capital needs to be made quickly or MCEL may not be able to capitalize on the lucrative, growing gaming market in Macau. The advice must consider both the immediate need to raise capital to get the projects back on track as well as the need for long-term financial flexibility to take advantage of future opportunities. The case considers a variety of domestic and international options to determine what best meets MCEL's needs.

Teaching Note: 8B12N018 (13 pages)
Industry: Other Services
Issues: International Finance; Capital Raising; ADR; Macau; Hong Kong; United States
Difficulty: 4 - Undergraduate/MBA



SZLN: ACQUIRING PEM
James E. Hatch, Lifan Wu, Xingyun Liu

Product Number: 9B10N007
Publication Date: 5/21/2010
Revision Date: 9/28/2010
Length: 21 pages

Shenzhen Zhongjin Lingnan Nonfemet Co. (SZLN) is a Chinese company that is contemplating the purchase of an Australian mining company. The management of SZLN must assess the merits of the acquisition, the offer to be made, how it is to be financed and the political implications of the purchase for both the governments of China and Australia.

Teaching Note: 8B10N07 (17 pages)
Industry: Mining, Quarrying, and Oil and Gas Extraction
Issues: China; Political Environment; Acquisitions
Difficulty: 4 - Undergraduate/MBA


Chapter 14:
Highly Leveraged Transactions

BAIN CAPITAL AND DOLLARAMA
Wayne Adlam, Ken Mark, Amanda Chan

Product Number: 9B12N002
Publication Date: 3/8/2012
Revision Date: 3/8/2012
Length: 15 pages

In 2004, the senior associate at a large Canadian bank is tasked with analyzing a potential Bain Capital buyout of Dollarama. The bank is offering $600 million in deal financing to the acquirer, Bain Capital Private Equity. Her role is to analyze potential financing structures, model various operating scenarios assuming different strategic directions, and assess the ability of Dollarama to service its debt following the acquisition.

Teaching Note: 8B12N002 (9 pages)
Industry: Retail Trade
Issues: Leveraged Buyout; Private Equity; Financial Analysis; Financing; Takeover Bids; Canada
Difficulty: 4 - Undergraduate/MBA



LEVERAGED BUYOUT (LBO) OF BCE INC.: HEDGING CURRENCY RISK
Colette Southam, Ahsen Amir-Ali, Samir Meghji

Product Number: 9B08N023
Publication Date: 1/20/2009
Length: 7 pages

In 2007, an analyst in the derivatives group of investment bank Grenfeld & Co. was asked to devise a hedging strategy for Providence Equity Partners (Providence) in Bell Canada Enterprises (BCE Inc.). Providence was based in the United States and any strategy would involve significant foreign exchange rate risk due to the conversion of returns into U.S. dollars. The analyst needed to consider several long-term hedging strategies that Grenfeld & Co. could recommend to Providence. Her vice-president had asked that she create a hedging strategy by initially assuming a 25 per cent IRR for the investment and its performance, based on two outcomes at the end of the investment (investment horizon = five years): a zero per cent IRR and a 25 per cent IRR.

Teaching Note: 8B08N23 (5 pages)
Industry: Information, Media & Telecommunications
Issues: Options; Hedging; Derivatives
Difficulty: 4 - Undergraduate/MBA



AIR NEW ZEALAND: THE RECAPITALIZATION DECISION (A)
Stephen R. Foerster, Patricia A. McGraw

Product Number: 9B02N017
Publication Date: 11/29/2002
Revision Date: 12/5/2009
Length: 23 pages

Air New Zealand is a national airline faced with a number of important strategic and financial issues. The company's recent acquisition of Ansett Australia had proved to be disastrous and a severe financial drain for Air New Zealand. Key issues facing Air New Zealand include the long-term strategic positioning of the business, and determining anticipated financing needs, the appropriate gearing ratio or capitalization (debt-to-equity) rate, and available sources of financing. A recent research report had summarized two fundamental questions that impacted on the company's stock price and needed to be addressed: Would the New Zealand government relax Air New Zealand's ownership restrictions in order to allow Singapore Airlines to increase its stake from 25 per cent to 49 per cent? If so, would any proposal fix Air New Zealand's balance sheet to allow Air New Zealand and Ansett to once again become viable airline competitors? Supplement to this case is Air New Zealand: The Recapitalization Decision (B), product number 9B02N020.

Teaching Note: 8B02N17 (15 pages)
Industry: Transportation and Warehousing
Issues: Financial Analysis; Financial Management; Financial Strategy; Strategic Change
Difficulty: 4 - Undergraduate/MBA


Chapter 15:
Business Alliances

BP IN RUSSIA: SETTLING THE JOINT VENTURE DISPUTE
Gevork Papiryan

Product Number: 9B08M099
Publication Date: 12/15/2008
Length: 22 pages

In September 2003, British Petroleum (BP) formed a 50/50 international joint venture (JV) company, TNK-BP, with a group of Russian investors: Alfa Group, Access Industries and Renova (AAR). This JV was established as a result of the merger of Russian oil companies TNK and Sidanko, owned by AAR, with the majority of BP's Russian oil assets. On May 26, 2008, TNK-BP's chief executive officer, Robert Dudley, told Vedomosti, Russia's leading business daily, about a conflict between British and Russian shareholders. During this dispute, AAR declared that BP treated TNK-BP as its subsidiary and not as a JV. Also, the Russian shareholders criticized the JV's leadership of the company's expansion strategy and climate. As the conflict escalated, BP's leadership needed to decide whether to walk away or continue its participation in the JV.

Teaching Note: 8B08M99 (8 pages)
Industry: Mining, Quarrying, and Oil and Gas Extraction
Issues: Corporate Strategy; Emerging Markets; Globalization; Joint Ventures
Difficulty: 4 - Undergraduate/MBA



MAPQUEST
Paul W. Beamish, Kevin K. Boeh

Product Number: 9B04M044
Publication Date: 9/20/2004
Revision Date: 9/18/2008
Length: 22 pages

MapQuest is a leading provider of mapping services and destination information as well as a publisher of maps, atlases and other guides. On the Internet, they provide these products and services both to consumers directly and to other businesses enabling these businesses to provide location, mapping and destination information to their own customers. The company completed a successful initial public offering five years ago and were in a strong competitive position. However, the markets were allowing competitors to quickly get funding in both private and public deals. As well, there were perceptions that a general stock market bubble existed for technology companies. The chief executive officer had several options available, and wanted to consider those options and present a recommendation to the board. Possible options included splitting the firm's old and new-line business units, raising capital to fund an acquisition strategy, forging a set of alliances, focusing on organic growth, and pursuing the sale of the firm.

Teaching Note: 8B04M44 (6 pages)
Industry: Administrative, Support, Waste Management and Remediation Services
Issues: Corporate Strategy; Strategic Alliances; Competitive Advantage; Mergers & Acquisitions
Difficulty: 4 - Undergraduate/MBA



ELI LILLY IN INDIA: RETHINKING THE JOINT VENTURE STRATEGY
Charles Dhanaraj, Paul W. Beamish, Nikhil Celly

Product Number: 9B04M016
Publication Date: 5/14/2004
Revision Date: 3/13/2017
Length: 18 pages

Eli Lilly and Company is a leading U.S. pharmaceutical company. The new president of intercontinental operations is re-evaluating all of the company's divisions, including the joint venture with Ranbaxy Laboratories Limited, one of India's largest pharmaceutical companies. This joint venture has run smoothly for a number of years despite their differences in focus, but recently Ranbaxy was experiencing cash flow difficulties due to its network of international sales. In addition, the Indian government was changing regulations for businesses in India, and joining the World Trade Organization would have an effect on India's chemical and drug regulations. The president must determine if this international joint venture still fits Eli Lilly's strategic objectives.

Teaching Note: 8B04M16 (18 pages)
Industry: Manufacturing
Issues: Joint Ventures; Emerging Markets; International Management; Strategic Alliances
Difficulty: 4 - Undergraduate/MBA



BEN & JERRY'S - JAPAN
James M. Hagen

Product Number: 9A99A037
Publication Date: 4/13/2000
Revision Date: 5/23/2017
Length: 17 pages

The CEO of Ben & Jerry's Homemade, Inc. needed to give sales and profits a serious boost; despite the company's excellent brand equity, it was losing market share and struggling to make a profit. The company's product was on store shelves in all U.S. states, but efforts to enter foreign markets had only been haphazard with non-U.S. sales accounting for just three per cent of total sales. The CEO needed to focus serious attention on entering the world's second largest ice cream market, Japan. An objective of Ben & Jerry's was to use the excess manufacturing capacity it had in the U.S., and it found that exporting ice cream from Vermont to Japan was feasible from a logistics and cost perspective. The company identified two leading partnering options. One was to give a Japanese convenience store chain exclusive rights to the product for a limited time. The other was to give long-term rights for all sales of the product in Japan to a Japanese-American who would build the brand. For the company to enter Japan in time for the upcoming summer season, it would have to be through one of these two partnering arrangements.

Teaching Note: 8A99A37 (6 pages)
Industry: Manufacturing
Issues: Strategic Alliances; Market Entry; International Marketing; Corporate Strategy
Difficulty: 4 - Undergraduate/MBA


Chapter 16:
Alternative Exit and Restructuring Strategies: Divestitures, Spin-offs, Carve-outs, Split-offs, & Tracking Stocks

GM: THE OPEL DECISION
Darren Meister, Ramasastry Chandrasekhar

Product Number: 9B10M022
Publication Date: 3/8/2010
Revision Date: 3/22/2010
Length: 19 pages

In July 2009, General Motors Company (GM),the world's second largest automotive enterprise, has come out of a bankruptcy orchestrated by the U.S. federal government. Leaner and focused after a 40-day exercise, GM is still a long way from a full-fledged financial recovery. The company is under a mandate to concentrate first on its U.S. market. Its European subsidiary, which manufactures the Opel cars, has been struggling for nearly a decade. The business seems fundamentally sound. Opel requires capital infusion and managerial skills for which GM has been talking to potential investors, such as Fiat of Italy, BAIC of China, Magna of Canada and RHJI of Belgium. The board of GM has to decide whether GM should liquidate Opel, retain it within its fold or go for partial divestiture. In the event of a sale of stake, the board has to decide whom, from among those short-listed by the chief executive officer and his team, it should bring aboard. The case provides an opportunity for students to use available data and their judgment to choose a bidder who can drive shareholder value. It helps them deal with issues such as timing and biases in a typical retain/liquidate/divest decision and also whether a company should have, on the lines of a more common M&A strategy, an ongoing divestiture strategy.

Teaching Note: 8B10M22 (6 pages)
Industry: Manufacturing
Issues: Portfolio Analysis; Strategic Management; International Business; Divestitures
Difficulty: 4 - Undergraduate/MBA



CQUAY TECHNOLOGIES CORP.
Paul W. Beamish, Kevin K. Boeh

Product Number: 9B04M068
Publication Date: 10/13/2004
Revision Date: 10/15/2009
Length: 12 pages

CQUAY Technologies Corp was a privately-held Canadian software company with offices in Toronto, Calgary and Washington, D.C. CQUAY marketed a patented location intelligence engine called Common Ground. The company's technology was designed for an emerging, multi-billion dollar segment of the spatial information management market. A year earlier, the board had asked the chief executive officer to shape the company into an acquisition target over the next 18 to 24 months. A year later there were no imminent acquisition discussions, and recent customer traction and the sales pipeline seemed to merit raising growth capital instead of following the acquisition-focused plan. The CEO wanted to keep his stockholders and board happy by executing the plan they had given him, but did not want to jeopardize possible customer growth. If he refocused the plan, he feared it might change acquisition opportunities. Without further contracts, the existing cash would sustain the company for only another six to eight months. The CEO thought the most likely outcome was to sell the company, but he needed to make the company more attractive. He planned to present options and a recommendation to the board of directors later that month.

Teaching Note: 8B04M68 (8 pages)
Industry: Administrative, Support, Waste Management and Remediation Services
Issues: Mergers & Acquisitions; Corporate Strategy; Venture Capital; Corporate Governance
Difficulty: 4 - Undergraduate/MBA



CEMEX: THE SOUTHDOWN OFFER
Ravi Sarathy, David T.A. Wesley

Product Number: 9B03M013
Publication Date: 4/2/2003
Revision Date: 10/21/2009
Length: 21 pages

Cemex, a cement multinational from Mexico, has become one of the three largest cement companies in the world, through internal growth and a series of global acquisitions over the 1999 to 2000 period. It is a relatively small player in the United States with insignificant market share. It has had conflicts with the U.S. cement industry over its cement exports to the United States, being the object of a successful anti-dumping suit brought by the U.S. cement industry before the International Trade Commission. One of its key opponents is Southdown which has testified before the USITC against Cemex. Southdown's chief executive officer is unhappy with his firm's stock price and frustrated by the lack of market recognition despite profitable operations and growth. He is considering selling his company and has talked with Cemex about being acquired. The case allows students to analyze the strategic rationale for an acquisition of Southdown by Cemex, and has information to allow students to probe questions of strategic fit and value.

Teaching Note: 8B03M13 (8 pages)
Industry: Manufacturing
Issues: Developing Countries; International Business; Anti-Dumping Action; Acquisitions; Northeastern
Difficulty: 4 - Undergraduate/MBA



FINNING INTERNATIONAL INC. IN THE UNITED KINGDOM
Stewart Thornhill, Ken Mark

Product Number: 9B02M017
Publication Date: 10/29/2002
Length: 21 pages

Finning International is a Canada-based international distributor of construction equipment with operations in the United Kingdom and Chile. The president of Finning International is faced with a dilemma: Can Finning divest its United Kingdom operations without damaging its relationship with its only supplier? Or is entry in the U.K. plant hire (equipment rental) market the only feasible option? The plant hire segment of the construction equipment industry has been growing steadily in the United Kingdom. Meanwhile, Finning has been faring poorly in the U.K. construction equipment sales market. The president's options include divesting its U.K. subsidiary and focusing on another part of the world, working to improve operations in the United Kingdom, or betting heavily by entering into the plant hire market. Each alternative has its own set of implications for Finning's valuable relationship with its supplier. Supplements Finning International: Moving Into Plant Hire and Finning International: Integrating Hewden Stuart PLC, products 9B02M023 and 9B02M022 outline the acquisition and integration of the acquisition.

Teaching Note: 8B02M17 (9 pages)
Industry: Manufacturing
Issues: Supplier Relations; Risk Analysis; International Management; Strategic Planning
Difficulty: 4 - Undergraduate/MBA


Chapter 17:
Alternative Exit and Restructuring Strategies: Bankruptcy Reorganization and Liquidation

WOLTERS BREWERY (A): NEGOTIATING RESTRUCTURING
Klaus Meyer

Product Number: 9B12M009
Publication Date: 3/19/2012
Revision Date: 3/19/2012
Length: 14 pages

Part (A) of this case series presents the situation of a multinational brewer, InBev, having acquired several breweries in Germany, and wishing to proceed with operational integration and the closure of smaller, less efficient plants. This move triggers resistance not only from the local workforce, but the local community. For InBev, this is a case of corporate restructuring and strategy implementation. Yet for a group of local entrepreneurs, this is an opportunity to plot a management buy-out (MBO) and to recreate a historical local brewery. The case is designed as a business negotiation setting that brings together Inbev, the local entrepreneurs, the city council, and a local bank (instructions for four teams involved in the negotiations are provided in the teaching note). The case can also be used as a conventional case on entrepreneurship or strategy implementation.

Teaching Note: 8B12M009 (14 pages)
Industry: Manufacturing
Issues: Management Buyout; Corporate Restructuring; Negotiation; Government and Business; Post-merger Integration; Beer Industry; Germany
Difficulty: 4 - Undergraduate/MBA



P.A. BERGNER & CO.
Robert W. White, Chris Lane, Will Matthews

Product Number: 9A96B015
Publication Date: 5/14/1996
Revision Date: 2/5/2010
Length: 15 pages

The executive vice-president finance and MIS of P.A. Bergner & Co. (Bergner), a large mid-western U.S.-based department store retailer, received word that Bank One had pulled its $32.1 million letter of credit. Buoyed by the successful acquisition of Boston Stores, Bergner acquired Carson, Pirie Scott & Co. The downturn in the economy coupled with excessive debt levels has precipitated a crisis. The focus of the case is on formulating a restructuring plan, including alternatives under bankruptcy legislation. The analysis requires the determination of Bergner's viability, optimal capital structure, value and reorganization plan. (A Microsoft Excel spreadsheet is available for use with this case, product 7A96B015.)

Teaching Note: 8A96B15 (222 KB)
Industry: Retail Trade
Issues: Valuation; Financial Strategy; Corporate Planning; Bankruptcy
Difficulty: 4 - Undergraduate/MBA


Chapter 18:
Cross-Border Merger and Acquisitions

CARLSBERG IN EMERGING MARKETS
Michael W. Hansen, Torben Pedersen, Marcus Moller Larsen

Product Number: 9B11M009
Publication Date: 3/23/2011
Length: 12 pages

Risking becoming the target of a hostile takeover or being cornered as a small regional player in the global beer industry, the Danish brewery Carlsberg decided in the early 2000s to expand into rapidly growing emerging markets to pursue new arenas of growth. By 2008, this strategy had paid off, and Carlsberg was positioned among the five largest breweries in the world. In the Russian market — one of the fastest-growing markets in the world — Carlsberg had become the market leader. In China — the world’s largest beer market in terms of size and population — the company had achieved a 55 per cent market share in Western China, and operated 20 brewery plants with approximately 5,000 employees. The ambitious acquisition strategy applied in emerging markets had become essential to Carlsberg’s business in relation to future growth and profits. Accordingly, the case focuses on Carlsberg’s entry into China, which started as a commercial failure in the eastern part of the country, but subsequently developed successfully in the west.

Teaching Note: 8B11M009 (15 pages)
Industry: Manufacturing
Issues: Acquisition Strategy; Global Strategy; Emerging Markets; Marketing Management; Beer Industry; Denmark; China
Difficulty: 4 - Undergraduate/MBA



BANCOLOMBIA: TALENT, CULTURE AND VALUE CREATION MANAGEMENT IN MERGERS
Juanita Cajiao Saenz

Product Number: 9B11C040
Publication Date: 12/19/2011
Length: 20 pages

The case reviews the main facts related to the merger process of three financial institutions — Bancolombia, Conavi, and Corfinsura — in Colombia in 2005 and 2006. The merger decision emerges from directors and senior executives foreseeing a major upcoming market transformation, including adjustment in industry regulation, improvement in international competence, and consolidation of main players, and their response in order to adapt to the new economic conditions. Considering the fact that the success rate of merger processes is not above 30 per cent, the sustained financial results achieved by Bancolombia from the very beginning of the integration process are robust indicators that invite exploration into what was done and how it was done.

Teaching Note: 8B11C040 (10 pages)
Industry: Finance and Insurance
Issues: Mergers & Acquisitions; Human Resources Management; Corporate Culture; Change Management; South America; Colombia
Difficulty: 5 - MBA/Postgraduate



ARLA AND MD FOODS: THE MERGER DECISION (A)
W. Glenn Rowe, Pankaj Shandilya

Product Number: 9B04M076
Publication Date: 6/22/2005
Revision Date: 10/15/2009
Length: 23 pages

The managing director of MD Foods of Denmark and the president of Arla of Sweden, both cooperatives, were contemplating whether their companies should merge to create Europe's largest dairy company. Arla and MD Foods wished to continue the success of their joint ventures in a much closer relationship, but wondered if their owners (the milk-producing farmers in each country) would approve the merger. In addition, the two companies were different in size, organizational structure, organizational culture, monetary currency used and language spoken. Finally, a cross-border merger of two cooperatives was unprecedented throughout the world. The supplement Arla and MD Food: The Merger Decision (B), product 9B05M013 describes the merger decision.

Teaching Note: 8B04M76 (8 pages)
Industry: Manufacturing
Issues: Strategy Implementation; Multinational; Mergers & Acquisitions; Environment
Difficulty: 4 - Undergraduate/MBA