Merger, Acquisition, and International Strategies Essay - 1

Merger, Acquisition, and International Strategies - Essay Example In acquisition, one company purchases another and establishes itself as a new owner. Normally, the dissolving company has to get the approval to merge with another through a majority vote of the share holders or as stipulated in the company’s constitution. The driving principle in mergers and acquisition is to make investor value. This means that after the merger the value of the two companies must exceed the value of the individual companies before the merger. It is important to note that the reasons behind mergers are far reaching, especially during the hard economic times. During such periods, big companies take the advantage of receding companies through share purchases with a view of creating a competitive advantage while achieving cost reduction. Any meaningful merger should be able to gain greater market share and efficiency. Once an agreement has been reached, then it should be made legal and its implementation done within the period stipulated in the agreement. The cu lture and working environment of the target company’s workforce must be considered at the time of merger acquisition strategy. When this is done, the workforce will not feel left out in the agreement and this boosts morale. The process of merging and acquisition is vital deal whose signing determines the gains and profits of the merging corporations. The process should therefore, be conducted in defined steps. The decision to have merging between two companies is complex in nature. This is because if it is not done carefully, it can affect the gains intended for in the merger or acquisition. In addition, merger and acquisition process should be conducted in steps as earlier stated. The initial step is the business valuation step in which the value of stock is assessed. In the assessment, the current financial performance as well as the estimated future performance is examined. Such steps should be geared towards profitability (Rosenbaum, 2008). 2. Identify one (1) company tha t would be a profitable candidate for the corporation to acquire or merge with and explain why this company would be a profitable target. Alcoa is a leading aluminum company in the United States of America. This public corporation was formed in 1907. The acronym Alcoa was coined in 1910 because of a merger with another company, which later in 1999 adopted it as an official name in 2001; Alcoa went into an acquisition agreement with Aluminum Corporation of china (Chalco) buying from them 9% of their shares. Alcoa has had a number of challenges since its inception, for instance in 1938, the department of justice-sued Alcoa for trying to monopolize. It also faced a financial crisis in 2004 leading to the sale of one of its divisions to Rhone Group, which has adopted the name Almatis Inc (Kazmi, & Kazmi, 2008). in the present day. In 2005, Alcoa acquired Russia and Belaya Kaliva production facilities that were major industry players to boost its performance and gain international recogn ition. It was during this time that Alcoa began improving on its performance when it started the construction in Iceland. This was the company’s first Greenfield smelting centre. This centre has been in existence for the last 20 years amid criticisms of corruption. In 2006, Alcoa shifted