Based on the given information in the case study regarding the acquisition of Nicholson File Company by Cooper Industries, there is no question that Cooper should try to gain control of Nicholson. This decision is based on an analysis of the bargaining positions of each group of Nicholson stockholders which have disparate goals and needs that need to be met. In addition, an appropriate payment method and specific dollar value based on a competitor's offer and Cooper financial data was decided. The remainder of this paper will provide the analysis and rationale for this determination.
Should Cooper Industries Acquire Nicholson File Company?c
Cooper Industries has been expanding through diversification since 1996. …show more content…
Cooper Industries was created in 1919 as a manufacturer of heavy machinery and equipment. They were the leading producer of engines and compressors used to pump natural gas through pipes and oil out of wells. Cooper Industries' sales reflected greatly on the sales of natural gas and oil, leading to volatility of their earnings related to the cyclical nature of heavy machinery sales. In order to even out their sales, in 1959, Cooper began acquiring other manufactures to increase their market spread. By 1966, they had acquired four companies, none of which shielded Cooper from cyclical cycles. In 1966, Cooper conducted a full review of their acquisition strategy because of unsuccessful past acquisitions. They came up with three criteria that each new acquisition must have; 1) The company must be in an industry where Cooper could become a major factor 2) The industry should be reasonably stable, with a broad market for products and a product line of "small-ticket" items. 3) Cooper would only acquire leading companies in their respected markets. Cooper used their newly implemented strategy to acquire Lufkin Rule Company in 1967. Then in 1969, Cooper acquired Crescent