Mergers and Acquisitions

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Acquisition Plan

Prepared by:
Ela Haxhiraj
Alba Sulce
Lorina Allushi
Mimoza Ballgjini

The plan objective

The company we chose to represent as the acquiring company is Eli Lilly and Company. This company has a long history in the market, and nowdays is one of the 100th largest pharmaceutical company in the world. Across the globe, Lilly discovers, develops, manufactures, and sells pharmaceutical products. It has a wide range of products which are sold in more than 125 countries.

One of the reasons this company is very successful even in such a competitive industry, is that they are very competent in managing strategic mergers and acquisitions. By collaborating with other pharmaceutical firms, Lilly continues to maintain its leader position in researching and developing medicine. Their major strategy is the development of new products. Therefore, even why they are most known for the development of anti-cancer vaccines, they want to expand and acquire other smaller pharmaceutical compan ies. This would increase the range of their products, and by acquiring firms outside the States, they would increase they would have wider access to other markets as well. The key financials for this company are very good. Both assets and equity has been growing with the years. Nevertheless, from 2011 to 2012 we have a decrease in the rate of return. The graph looks like this:

In order to go back to an increase in the Return on Assets and Return on In vestment, we thought Lilly should make an acquisition in Bulgaria. We estimated the Biovet Ad pharmaceutical company as the most potential target.

We thought this would be a good target for Lilly based on the declaration that its CEO had after acquiring Imclone, which is also a relatively smaller company compared with Lilly.

What John Lechleiter (the CEO) said was “We could imagine going for further smaller buys ... in related market areas such as biotechnology, diagnostics, animal health or further". Since Biovet is the leading Bulgarian veterinary medicine producer, we thought that it exactly what Lilly is looking for. One of the things that Lilly pays attention to is the quality of their products. This is one of the key objectives for Biovet as well, since its production has extensive quality assurance and packaged good facilities, as it complies with the requirements of the European, British and United States Pharmacopoeia standards. Their employees are also highly skilled individuals with extensive experience in the animal health industry and with good knowledge of their local markets and customers.

 Timing
Timing is a crucial part of the acquisition plan. Once we announce the deal we are going to prepare for the change of control and the post-merger integration period which is when the value of the merger and the acquisition will be realized.

Correct timing is a must for both parties, but the responsibility for choosing the right moment to step forward into the M&A marketplace always rests with the seller. It’s a decision that calls for introspective as well as strategic thinking. The successful timing of an y sale depends on the seller’s answers to two general questions: one having to do with emotional readiness, the other connected to price.

We believe that the deal negotiation period is going to take up to 6 months. During this time we will agree on initiating the process and completing the due diligence to make sure that Biovet is worth what we think it is worth it. Moreover we will also seek for regulatory approval. After the final decision has been made, we will announce the deal and advise the management on what they should tell to the staff. At this point in time, we are also planning to establish a PMO, which will be needed to initiate the change of control and in tegration. At the end of the second month the final PMO and the integration team will be formalized and implemented. Moreover as the process goes on, by the end of the sixth month we will...
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