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Essay / Research Paper Abstract
This 24 page paper looks at the theory behind the making of acquisition including the financing with Lonza used as an example target company. The paper is written in 4 parts, the first part considers the reasons why a major pharmaceutical compnay may want to acquire the Swiss company Lonza. The second part of the paper considers how purchasing compnay may decide on the offer price is calculated, the focus is on the dividend discount model. The third part of the paper considers different funding options and the last part of the paper makes a recommendation for the way the acquisition should be funded. The bibliography cites 16 sources.
Page Count:
24 pages (~225 words per page)
File: TS14_TElonzab.rtf
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Unformatted sample text from the term paper:
over, another company that has already access to the markets or the technology that the company desires, or has a greater potential to help the ocmpjnay realise the goals.
In the case of the pharmaceutical companys desire to acquire Lonza the initial motivating may be seen as the desire to access markets in which Lonza is already active, but
the main motivation must be to protect the company and add value to shareholders. Looking at the current theories in the way that acquisition may or may not add
value there are some arguments that will help any company determine if the proposed acquisition is one that they should consider. It can be the search for cost advantage
by way of economies of scale and scope as well as market share that lead many companies to peruse a company policy of mergers or acquisitions as well as attempting
to behaviour in the expected manner in response to the normal business models or organisational behaviour. If we consider the search for a competitive advantage by way of differentiation merger
and/or acquisition can be seen as a strategic tool. The acquisition may bring resources, including human intellectual knowledge as well as patents to a company which can be used to
further the differentiation of a product or a service. Alternatively, the purchase of the company or the merger may bring that competitive advantage to the newly formed merger or parent
company. It is true that in the competitive market the newer companies may often not be able to compete by way of cost advantage so they look to differentiation and
niche markets. The lack of financial strength may be the element that leaves them vulnerable to a take-over or merger, friendly or hostile.
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