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Mergers may result into a stronger company with combined assets, competencies or into a dilution of financial strengths of one of the companies. Some of the examples of mergers that made deadlines include the one between British Salt and TATA Chemicals. This article focusses on the Disney and Pixar merger that saw Disney acquiring shares worth $ 7.4 billion in Pixar. This merger was more than a necessity for Disney especially because of Pixar’s creative force.
According to Barnes (2008), Pixar was founded as the Graphics Group in 1975 with initial intention of making the first completely digital movie. Pixar started as a high end computer hardware company and one of their customers were Disney Studios who bought their Pixar Image Computer that never sold well. Due to poor sales, Pixar began animations and in 1990, the company’s hardware division was sold by Steve Jobs although Pixar still maintained her relationship with Walt Disney Feature Animation (Baid, 2012). Pixer then made a $26 million deal with Disney to produce some animated feature films that included Toy Story that went on to gross more than $350 million worldwide in 1995 and later became a major controversy between the two companies. Pixar became Hollywood’s first fully computer-generated feature film which made it become a household name overnight. All along, there was a close business relationship between Pixer and Disney that saw Disney’s acquisition of Pixer on May 5, 2006 (Baid, 2012).
Barnes (2008) explains that Disney has been preeminent in the field of family entertainment that began as a cartoon studio in the 1920s to the current global corporation. The company still provides quality entertainment for many families across the world Disney began with Alice comedies where he created a character named Oswald the Lucky Rabbit before another character known as Mickey Mouse. Disney began animated feature film in 1934 with the story of
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In the modern-day business world, many corporate organizations, private and public companies extensively implement strategies by which they buy, sell, divide and combine with one or more other business entities. The main reasons for which these businesses acquire or combine with others are that mergers and acquisitions allow businesses to support one another financially and managerially, thereby promoting rapid growth.
The study has also been based on two broad objectives namely: to identify the effect of misvaluation on mergers and acquisitions as well as to analyse the role of mergers and acquisitions in the competitive business environment. The literature reviewed showed that mergers and acquisitions do not guarantee success of a business due to several reasons.
Mergers and acquisitions (or M&As as they were colloquially known) were so profitable that many of the best firms on Wall Street had opened up their own M&A Divisions to take full advantage of this phenomenon. Mergers and acquisitions are corporate deals that have established their worth in the social and financial landscape.
orporate strategy. The dealing occurs in the form of selling, buying and merging of two or more companies. This deal in turn helps the developing company to grow at a faster pace within the industry and even without establishing any separate entity. In general merger and acquisition are the two simple forms of expanding the business (Sherman, 2010, p.2-3).
This discussion talks that in recent years, economies around the globe have been facing frequent mergers, alliances, and acquisitions due to rapidly changing needs of customers and markets. These activities usually, are functions of long-term corporate strategy, need for diversification or expansion or merely some legal contractual obligations.
Merger and Acquisition have an intrinsic measure of mutual benefits to the participating parties as compared to partnerships. They might be cumbersome with respect to time and complexities of agreements but the business perspective in them is long term and beneficial.
These types of transactions happen very often in the finance sector. Firms purchase other firms for a number of reasons. Whatever reasons prompt a particular deal, M&A are thought to be successful when multiple synergies are achieved and when the business combination increases the net cash flow of the merged business more than what each firm could have achieved on its own.
Plans depend upon the existence of alternatives, and then decisions have to be made regarding what to do, how to do it, when to do it and by whom it is to be done. Organizations operate in rapidly changing environment, and for this reason it is impossible to stipulate minor details and predict all changes needed for strategy implementation.
tions related to merger and acquisition, the following discussion will consider evaluating the pros as well as the cons of a similar deal undertaken by Shire/NPS to analyse whether such a decision will serve beneficial for the shareholders of both companies.
In order to expand
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