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Essay / Research Paper Abstract
This 5 page paper proposes that WalGreen pharmacies would be a good acquisition for Wal-Mart and then justifies this by looking at the performance and how the purchase may be financed as well as using tools such as the payback period, the net present value (NPV), the internal rate of return (IRR) and the profitability index. The paper then considers the potential problems and allowances that should be made when considering any acquisition. The bibliography cites 2 sources.
Page Count:
5 pages (~225 words per page)
File: TS14_TEwalwal.rtf
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Unformatted sample text from the term paper:
a good match. The supermarket industry is mature and many of the competitors that would be potential targets in the same industry are in similar areas so would not add
as much as hoped for. Wal-Mart has been diversifying with increased numbers of neighbourhood stores so they can gain more sales at a more local level for smaller spend levels
but also more frequently. The company may also want to make an acquisition where there is the potential for a great deal of added value and as such with
Wal-Mart having a great deal of reserves we can argue that they may look for a complimentary business that can increase economies of scope and scale but also build on
these existing strategies. Therefore we are going to argue that one potential target could been the large pharmacy chain WalGreens, located in many areas where Wal-Mart does not have a
presence, but having a good cross over on the products sold to help increase economies of scale and scope. This will compliment the neighbourhood stores. If we look at the
acquisition terms we can see currently that the market capitalisation is $ 46,897 million. However the share price is at a high and looks like it is gong to fall
again, the company may need to wait and then offer a small premium on the share price. This gives us an indication of the price that may be paid.
There is a low debt level and if we look at the performance there is great deal of potential. However if we look at the growth and the yield, with
a yield of company 0.46% and Wal-Mart has a yield 1.18% this may be attractive to the shareholders and as such we can argue this should be financed with part
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