Preview

Cooper Industries Inc.

Powerful Essays
Open Document
Open Document
5587 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Cooper Industries Inc.
Cooper Industries Inc.
Based on the given information in the case study regarding the acquisition of Nicholson File Company by Cooper Industries, there is no question that Cooper should try to gain control of Nicholson. This decision is based on an analysis of the bargaining positions of each group of Nicholson stockholders which have disparate goals and needs that need to be met. In addition, an appropriate payment method and specific dollar value based on a competitor's offer and Cooper financial data was decided. The remainder of this paper will provide the analysis and rationale for this determination.
Should Cooper Industries Acquire Nicholson File Company?c
Cooper Industries has been expanding through diversification since 1996. Cooper's requirements
Is this essay helpful? Join OPPapers to read more and access more than 550,000 just like it!
GET BETTER GRADES to acquire a company has three major components. The target company must be:
1. In an industry in which Cooper could become a major player
2. In an industry that is fairly stable, with a broad market for the products and a product line of ‘small ticket' items; and
3. A leader in its market segment.
When looking at the criteria that Cizik's company (Cooper Industries), set forth relative to acquisitions, the acquisition of Nicholson meets all three objectives plus has significant potential short and long-term potential. Cooper management feels that by eliminating redundancy and streamlining Nicholson's operations this potential can be realized.
Currently, Nicholson's financial history boasts a 2% increase in profit annually but this percentage is way below the industry average of 6%. Cooper management proposed that if Nicholson stops selling to every market, increased efficiencies would result and cut cost of goods sold from 69% of sales to 65%. It was also suggested that the acquisition could lower...

The management of Cooper Industries, Inc., is considering whether to acquire the

You May Also Find These Documents Helpful

  • Good Essays

    Cooper Industries has been pursuing a policy of expansion through the acquisition of other companies and this strategy appears to be working well for them. They have acquired a number of companies and have been successful in integrating them into Cooper Industries. They have established three criteria that potential companies for acquisition must meet and Nicholson meets all three criteria. Nicholson holds 50% of the market share in files and rasps, its main products, therefore implying that Cooper could be a major factor in this industry. Nicholson is also a leading company in their markets and it is a stable company in terms of not being dependent on a few major customers.…

    • 510 Words
    • 3 Pages
    Good Essays
  • Best Essays

    Timken Case Study

    • 4800 Words
    • 20 Pages

    Timken Company requires a report on its consideration to acquire Torrington from Ingersoll-Rand. This reports provides the needed information on Torrington’s worth, price at which Torrington could be acquired and the acquisition strategies to negotiate its deal. The evaluation uses the discounted cash flow analysis using WACC to calculate the value of Torrington worth with synergies. The value turned out to be more than the estimated minimum value of the target. The final recommendation is to proceed with the acquisition as planed which would be beneficial to the Timken.…

    • 4800 Words
    • 20 Pages
    Best Essays
  • Good Essays

    Is this essay helpful? Join OPPapers to read more and access more than 650,000 just like it!…

    • 361 Words
    • 2 Pages
    Good Essays
  • Good Essays

    Is this Essay helpful? Join OPPapers to read more and access more than 350,000 just like it!…

    • 1570 Words
    • 7 Pages
    Good Essays
  • Good Essays

    Cultural Competence

    • 330 Words
    • 2 Pages

    Is this Essay helpful? Join OPPapers to read more and access more than 350,000 just like it!…

    • 330 Words
    • 2 Pages
    Good Essays
  • Satisfactory Essays

    Michael Moore

    • 345 Words
    • 2 Pages

    Is this essay helpful? Join OPPapers to read more and access more than 550,000 just like it!…

    • 345 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Cooper Case

    • 1578 Words
    • 7 Pages

    Cooper was interested in Nicholson because of its competitive strength in the hand tools industry. Nicholson had a 50% share for files and wraps with a very strong brand name and high quality line. It also had a 9% share of the 200 million handsaws and saw blades market with excellent brand & quality. It had a very effective and large distribution system across US, Canada and overseas. Cooper industries believed that Nicholson can achieve 6% annual sales growth and also bring down the cost of goods sold from 69% to 65% and selling and administrative expenses from 22% to 19%, thereby increasing its profitability. Cooper would be able to use Nicholson’s distribution system to cross sell Cooper’s hand tool lines in the industrial and consumer markets.…

    • 1578 Words
    • 7 Pages
    Good Essays
  • Powerful Essays

    Jones Electrical Case

    • 1029 Words
    • 5 Pages

    Tactical Approach to Growth - Facing competition from national distributors, home centers, and other supply houses, JED grew sales competing on price and aggressive direct sales, resulting in YoY growth in excess of 17%.. Maintaining tight control over operating expenses (commissioned sales force, paying suppliers within 10 days of invoice to take advantage of the 2% discount, adept at forecasting, maintaining modest inventory levels) promoted profitability, but growth was increasing the overall operating cycle, resulting in greater borrowing needs.…

    • 1029 Words
    • 5 Pages
    Powerful Essays
  • Good Essays

    Over the next couple of months, I will be conducting research on Target (TGT) and J.C. Penny (JCP). The reason for this is so that I may give my insight on which company I feel will be the most desirable one for Celash, Byrne & Moovon (CB&M). . Using detailed financial statements on file with the Securities and Exchange Commission as well as data available on each of the companies web sites, Foundations of Financial Management With Time Value of Money, course book, Interpretation of Financial Statements, and The Value Line Investment Survey, make a recommendation as to which of the two is the most desirable acquisition and at what price.…

    • 619 Words
    • 3 Pages
    Good Essays
  • Satisfactory Essays

    Timken

    • 251 Words
    • 2 Pages

    Top management of Timken hires you as consultants to perform an independent analysis and recommend the best, in your opinion, course of action in the proposed acquisition of the Torrington Company. Your task is to write a report that will address their questions and concerns, in particular: 1. 2. 3. 4. How does Torrington fit with the Timken Company? What are the expected synergies? What is your stand alone valuation of Torrington? What is your with-synergies valuation of Torrington? Should Timken be concerned about losing its investment-grade rating? How do Timken’s financial ratios compare with those of other industrial firms in 2002? How would those ratios change if Timken financed the acquisition with debt? 5. What is the price Ingersoll-Rand is likely to accept? Is Ingersoll-Rand likely to want a cash deal or a stock-for-stock deal? 6. 7. Should Timken go forward with the acquisition at all? If Timken decides to go forward with the acquisition, how should they structure the deal in terms of the price offered and the method of payment? What is the recommended bidding and negotiation strategy? Draw on as many arguments, methods and approaches as possible. Clearly explain all assumptions or judgements you make. Where applicable, refer to relevant theoretical concepts. Please note that even though this is a real business case, it is the quality of your analysis that will be marked, not how well your analysis and recommendation fit the actual subsequent developments.…

    • 251 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Cooper Industries acquired more than 60 manufacturing companies over a thirty year span in order to increase the size and the scope of the company. Most of the acquired companies made it possible for Cooper to be independent of the outside environment and giving full control of the manufacturing process concerning their business while avoiding anti-trust allegations. Cooper basically purchased every company that is vital to its energy industry and all the side industries that effect it. From tools to fuses to cables to the drilling equipment was manufactured and distributed by the corporation's divisions. Each acquisition is decided from a wish list that was closely examined and studied. At the time of the take over, the Management Development & Planning division would implement the corporate strategy in a period of three to five years. This involves diversification and elimination of the products that are poor sellers. In some cases the production plant is…

    • 598 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Unit 4 Key Drivers P1

    • 748 Words
    • 3 Pages

    An organisation may well buy another company for any one of or combination of the following reasons:…

    • 748 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    Dalular General Company

    • 3607 Words
    • 15 Pages

    Some of these include: rivals’ similar competitive strategies, low barriers of entry into the market, and the absence of a differentiation strategy.…

    • 3607 Words
    • 15 Pages
    Powerful Essays
  • Good Essays

    Growing for Broke

    • 761 Words
    • 4 Pages

    One of the most common arguments for mergers and acquisitions is the belief that "synergies" exist, allowing the two companies to work more efficiently together than either would separately. Such synergies may result from the firms' combined ability to exploit economies of scale, eliminate duplicated functions, share managerial expertise, and raise larger amounts of capital. These distinguishing features had made Nicholas Anaptyxi,CEO of Paragon to battle it out with his colleagues to acquire MonitoRobotics.The case study portrays Nicholas as a visionary and a hard-driving builder who belonged to the same thought of train as his father. They both believed that to get better they had to grow bigger. He had worked in WRT,Cleavland where he climbed up the ranks due to the mere fact that he had the ability to spot new market opportunities and helped bringing in the profits and revenues. His urge to expand WRT was always suppressed as the people at its headquarters didn’t favor the decision. So he didn’t have second thoughts when he was offered a position to manage Paragon at Ohio.Paragon,was a thriving machine tool company that was built around a line of high end machines of aerospace engines. However the market for their product was essentially stagnant and foreign competition had started to take its toll. Paragon had began to face brutal cyclical economic swings. Nicholas had launched a number of initiatives to surpass the obstacles. But these initiatives were short term investments for long term goals. The profit margins had slipped and his colleagues became skeptical.Inspite of the year on year drop in earnings, Nicholas wanted to acquire MonitoRobotics to give Paragon a powerful presence in the fast growing business. Paragons service division accounted for less than 10% of the revenue. So to outrace Bellows&Samson,Pragon had to acquire Monito Robotics which was a breakthrough opportunity.William Liitlefield,CFO,being the pessimist he is, argued…

    • 761 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    Industrial Equipment Case

    • 1984 Words
    • 6 Pages

    Industrial Equipment INC. sold and serviced a variety of industrial equipment and related products to hospitals, nursing homes, hotels, motels and various other organizations in the four Atlantic Canadian provinces of New Brunswick, Nova Scotia, PEI and Newfoundland/Labrador. In addition to distributing a broad line of specialized equipment IE provided design, specification and planning assistance to architects, builders and owners designing new facilities or renovating existing operations. Since its inception in 2004 the company had experienced growth in sales. The main concern for the owner of IE Jon Costello is how to maintain the growth trend that the company has experienced over the first few years. Mr. Costello wants to see the business growth through expanded operations and selective acquisition. The way he perceives it, he has three options to choose from (1) expanding by purchasing Hines Equipment his father-in-law’s business an existing equipment business and his most direct competitor in the area (2) he can also expand by purchasing Metro service the sub-contraction company so it has its own service facility (3) he can purchase Quebec equipment so IE can expand its geographic reach and also enter the food services industry. Mr. Costello needs to evaluate these options to see which one of these options give him the best opportunity to grow the business in the long term.…

    • 1984 Words
    • 6 Pages
    Powerful Essays