Mergers and acquisitions-B Coursework Example | Topics and Well Written Essays - 2500 words

Mergers and learnings-B - Coursework ExampleAre any Sell-Offs Likely? 10 7. Risk Given that the Majority of Take all overs Destroy Shareholder Value, What Are the Major Risks? 11 Conclusion 13 References 14 Introduction Evidences reveal that M&As can be quite risky to lead the pathway of the acquiring go withs destruction and on the other hand, be highly beneficial to assist the connection in the attainment of its long-term documentarys. Despite the immense risk, companies take for M&As in order to gain the bene agrees of operational leap, integration, larger customer base, channels and higher competencies (Galpin & Herdon, 2007). One of the most risky acquisitions in the new past can be identified as the acquisition of National Westminster Bank (NatWest) by the Royal Bank of Scotland (RBS) in the year 2000. It is recorded as one of the most daring acquisitions, due to the fact that during the period of acquiring NatWest, RBS was recognised to be smaller than the pit company. It took a great effort from RBSs end to complete the deal and rewarded it the reputation of one of the leaders in the British Banking Industry (Larsen, 2007). With this concern, the paper will examine the entire process of acquisition considering the various aspects, such as strategic fitness of NatWest, regulatory factors influencing the process, justification of the valuation of acquisition, defence tactics applied, implementation of integration and risks involved in the acquisition. 1. dodging How Does The Target Company Appear To Fit into the Acquirers Long-Term Strategy? According to the experts, strategic fitness of the target company in M&A is considered to be one of the most significant aspects while determining the plan. Because, underneath every M&A the observed motive of the acquiring company or the merging companies are to increase the value of the two companies together which would be more than the sum of the total values of both the companies. Strategic fit of the ta rget company, thus, holds a significant position to increase the overall value of the acquirer (Lee & Pennings, 1996). The strategic fit of the acquisition and the target company can be analysed in depth considering the fact that M&As are often termed as a past of the strategic objective of the acquirer to attain outgrowth and higher competency (Edinburgh Business School, 2008). The objective can be swell identified in the acquisition of NatWest by RBS. It was a horizontal acquisition, which means that the target company and the acquirer belonged to similar product line and also to a similar cultural background. This reduced the constraints in terms of cultural divergences. The prime objective of the acquisition depended on the fact that RBS was facing major difficulties in terms of shrinking stock prices to approx 32% and required growth. Similarly, with an increased competition and reducing marketplace share led by the falling stock price and increased operational costs NatWest opted to go for an M&A in order to function in the industry (Mahar & Polson, 2003). Being three times larger than RBS, NatWest was able to reward a higher market share and increased balance carpenters plane value quite instantly after the acquisition with a paid bid of ?21 billion (NatWest, n.d). Subsequently, the stock price of RBS increased rapidly over the next two years (Mahar & Polson, 2003). Therefore, it is quite apparent that the acquisition proved to be a successful one in the short-term as well as in the long-term perspective. The market