Lester Electronics and Shang-Wa Electronics have a long-standing business relationship. The owners of these firms are close friends, both working diligently to increase market share, profits, and the reputation of their companies. Both companies are financially solvent, and both companies are making strides to address the growing demand for their products and services. Their exclusive business agreement has been extremely successful and to date has ensured a competitive edge in the electronics market. New competitors have approached both Lester and Shang-Wa with tender offers to purchase some or the entire corporations share. This situation has created the opportunity for a merger between Lester and Shang-Wa, enabling these companies to become a more powerful force in the electronics industry.
New competitors have approached both Lester and Shang-Wa with tender offers, offers to purchase some or all the corporations' shares (Investorpedia, 2006). According to Mark Walker, there are six strategic objectives for takeovers and mergers: (1) geographic expansion, (2) broaden the product line, (3) increase market share, (4) vertical integration, (5) diversification (no overlap), (6) diversification (overlap) (2000). Lester Electronics and Shang-Wa Electronics must investigate these offers to analyze their effect on corporate solvency, market share, and future goals and objectives.
LEI and Shang-Wa can endeavor to meet growing global demands by merging production and distribution services into a unified entity that will both increase corporate exposure and business opportunities in the global market while decreasing industry competition.
The proposal to buy Shang-Wa can be based on raising the capital with 75% debt and 25% Equity. From the financial statements of Shang-Wa and Lester it is evident that Lester's average debt ratio is 0.30 when... [continues]
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