Cooper Industries Case Analysis
Copper Industries CASE ANALYSIS Any merger or acquisition is an extremely complex procedure from pre-deal planning, and deal completion, through to post deal integration and the extraction of value. ... The Nicholson File Company is involved in what is called tender offer acquisition with Cooper. ... This takeover battle between HK Porter, VLN Corporation, and the Nicholson File Company has opened the door for Cooper Industries to acquire Nicholson and add it as a key element to their firm’s diversification. Cooper Industries must now decide whether to attempt to acquire the Nicholson File Company and what acquisition tactics to use. From an analysis perspective, Cooper Industries should acquire the Nicholson File Company because the acquisition will prove to be very important to both Nicholson’s and Cooper’s financial futures. The Nicholson File Company currently has depressed stock performance but the stock has good rebound potential, thus acquisition with Cooper Industries would offer Nicholson more liquidity, which makes the acquisition attractive for Cooper. ... Therefore, in Cooper’s situation management must decide what is the value of control of Nicholson and how can they estimate that value. Cooper has established the motive for this acquisition diversification because management’s intent is to stabilize their earnings and reduce risk. ... At this point, Cooper Industries whose a manufacturer of heavy equipment is observing the Nicholson File Company, which is a leading manufacturer of hand tools, as an acquisition candidate for their company’s diversification program. ... The maximum price that Cooper can afford to pay for Nicholson and still keep the acquisition attractive is $67.09 per share of Nicholson stock, which will give Cooper Industries a 10% Internal Rate of Return (Exhibit A & F).