Cooper Industry, H.K. Porter Company and Vln Corporation Essay Example
Cooper Industry, H.K. Porter Company and Vln Corporation Essay Example

Cooper Industry, H.K. Porter Company and Vln Corporation Essay Example

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  • Pages: 2 (498 words)
  • Published: September 14, 2018
  • Type: Case Study
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Both H. K. Porter Company and VLN Corporation have made offers to the shareholders of Nicholson File Company, leading to a battle over its takeover. Now, Cooper Industry's management must decide whether or not to join in for control. The main concerns for Cooper Industry's management are: is Nicholson File Company a worthwhile acquisition target?

The text discusses three main points regarding the potential merger of Nicholson with Cooper Industries. It asks about the synergies and attractiveness of Nicholson as a target, in addition to whether pursuing this acquisition is strategically justified. It also highlights the integration issues that Cooper Industries might encounter if it acquires Nicholson, and recommends management actions to facilitate successful integration. Lastly, it poses the question of the range of prices Cooper Industries should be willing to pay for each share of Nicholson's sto

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ck if they decide to acquire the company.

Nicholson's role in Cooper's acquisition strategy lies in its potential to bolster Cooper's presence in the hand tools business. Cooper already possesses a strong proficiency in machine tool manufacturing, making it a viable contender in this industry. Additionally, Cooper faces a notable challenge in the form of cyclicality within its business, which is particularly pronounced due to its reliance on the Oil and Gas sectors. These sectors are heavily influenced by the overall state of the economy.

Cooper aims to avoid slowdowns and diversify through acquisitions to prevent potential downfall. Acquiring business in the hand tools industry, which has less cyclical behavior and smoother cash flows compared to Cooper's primary business, aligns with Cooper's goal of stabilizing its income. The hand tools industry encompasses various products such as files,

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saws, and hammers, mostly consisting of smaller purchases. This diversification ensures that Nicholson, the acquired company, does not rely on a particular customer or industry for its revenues, unlike Cooper.

Nicholson, the market leader in files and rasps, ranks 4th in handsaws and saw blades, making it an ideal fit for Cooper's acquisition strategy of leading companies. This acquisition would follow three previous acquisitions, all in the hand tools business. Cooper's clear intention to expand into this line is reflected in these acquisitions. Adding Nicholson to Cooper's hand tools portfolio would offer a broader range of products. The aim was to create a comprehensive hand tools company that could utilize the same distribution channels as the parent company, thereby enhancing returns.

According to its strategic policy, Cooper should consider Nicholson as a desirable acquisition target. Cooper believes that acquiring Nicholson will lead to improvements in Nicholson's operations. Cooper also acknowledges that certain product lines of Nicholson are not profitable, which is a common issue in family-run businesses. Cooper's perspective is that if Nicholson focuses on its profitable product lines, it can streamline its inventory distribution network. It is worth noting that the distribution network required for selling Nicholson's products is already maintained by Cooper for its acquired hand tools businesses.

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