Mercury Athletic
Overview
The footwear industry is a mature, very competitive with low growth and stable profit margins. Active Gear, Inc. is a privately held footwear company which is a profitable firm in the industry with $470.3 million revenue in 2006. West Coast Fashions, Inc is a large business of men’s and women’s apparel decided to dispose of one of their divisions: Mercury Athletic with $431.1 million revenue in 2006. AGI is very profitable but it is smaller than other competitors, which is becoming a competitive disadvantage, so that AGI saw it has a possible opportunity for growth via acquire Mercury Athletic which represents a similar market share in the mature, highly competitive industry.
Executive Summary
There are several reasons why Mercury Athletic is an appropriate target for AGI since an acquisition.
Firstly, AGI and Mercury are dealing in the similar footwear industries. And the main products of Mercury are athletic and casual footwear which are a strategic fit for the AGI. Both of the companies’ manufactures placed in China, it will help AGI overcome the competitive disadvantages. They can share the resources and infrastructure with each other through the geographical advantage.
Secondly, Acquiring Mercury would build synergies by two companies merging those could improve both companies’ finances, like roughly double AGI’s revenue, increase its leverage with contract manufacturers, and expanding its presence with key retailers and distributors. They are more successful when they work together than when they work separately.
Finally, the acquisition would present some possible marketing advantages. Mercury Athletic has 4 major product lines: men’s and women’s athletic and casual footwear. Men’s athletic footwear is the leading product for Mercury Athletic. Women’s casual footwear is Mercury’s worst performing product that is may help AGI to achieve a lower acquisition price. Since despite the unsuccessfulness of Mercury’s women’s line, it may be able
The footwear industry is a mature, very competitive with low growth and stable profit margins. Active Gear, Inc. is a privately held footwear company which is a profitable firm in the industry with $470.3 million revenue in 2006. West Coast Fashions, Inc is a large business of men’s and women’s apparel decided to dispose of one of their divisions: Mercury Athletic with $431.1 million revenue in 2006. AGI is very profitable but it is smaller than other competitors, which is becoming a competitive disadvantage, so that AGI saw it has a possible opportunity for growth via acquire Mercury Athletic which represents a similar market share in the mature, highly competitive industry.
Executive Summary
There are several reasons why Mercury Athletic is an appropriate target for AGI since an acquisition.
Firstly, AGI and Mercury are dealing in the similar footwear industries. And the main products of Mercury are athletic and casual footwear which are a strategic fit for the AGI. Both of the companies’ manufactures placed in China, it will help AGI overcome the competitive disadvantages. They can share the resources and infrastructure with each other through the geographical advantage.
Secondly, Acquiring Mercury would build synergies by two companies merging those could improve both companies’ finances, like roughly double AGI’s revenue, increase its leverage with contract manufacturers, and expanding its presence with key retailers and distributors. They are more successful when they work together than when they work separately.
Finally, the acquisition would present some possible marketing advantages. Mercury Athletic has 4 major product lines: men’s and women’s athletic and casual footwear. Men’s athletic footwear is the leading product for Mercury Athletic. Women’s casual footwear is Mercury’s worst performing product that is may help AGI to achieve a lower acquisition price. Since despite the unsuccessfulness of Mercury’s women’s line, it may be able