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Essay / Research Paper Abstract
This 8 page paper considers how a merger can create value, and the difficulties that it may face, Using the example of the merger/acquisition of Chrysler by Daimler Benz and the problems that were encountered as well as the potential for value to be added. The bibliography cites 9 sources.
Page Count:
8 pages (~225 words per page)
File: TS14_TEdamlier.rtf
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Unformatted sample text from the term paper:
a merger or acquisition strategy we can look at a single case and examine the successes and failures as well as the motivations and goals of the transaction, the case
we will use here is that the acquisition of Chrysler and Daimler-Benz. In 1998 the Chrysler group was acquired by Daimler-Benz for $37 million (Ostle, 2001). In making
this acquisition there were a range of potential benefits that could be gained by Daimler-Benz that reflect the general philosophy behind mergers. The main idea is that the total of
the combined entity will be greater than the sum of its parts that existed before the merger (Pilloff, 1996). It is generally
perceived that the main gain of many merger will be due to increase in the performance in the post merger, or acquired, company. This improvement in the performance of the
company may be achieved in several ways, usually centring around operational efficiency gains as a result of economies of scale or the acquisition of additional or superior skills or technology
(Pilloff, 1996). The efficiency gain may come due to management styles and usage. It is likely that the acquiring firm may have
management systems and abilities which are superior to that of the target which was acquired (Pilloff, 1996). Therefore the newly acquired target company may have its own performance improved
due to the application of the newer management techniques (Pilloff, 1996). This can result in a higher level of production utilising exactly the same resources as the pre-acquisition company,
but these are also very difficult to realise (Cornett et al, 1996). The second method of creating higher levels of efficiency can be seen as the elimination of redundant facilities,
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