Stock and Nicholson Essay

Submitted By Bluebearbay1
Words: 727
Pages: 3
Open Document
What are the concerns and what are the bargaining positions of each group of Nicholson stockholders? What must Copper offer each group in order to acquire its shares?
As we already know, companies other than Cooper Industries are interested in acquiring Nicholson File Company. Nicholson’s shares are split amongst its 4,200 stockholders, 20% of which are controlled by the Nicholson family and management (HBS pg 33). With external companies coming forward and trying to acquire the company, Nicholson face several concerns and are subjected to several different bargaining powers. Bargaining powers is the ability of parties, in this case, Nicholson and the companies seeking for control, in a situation to exert influence over each other; in a perfectly competitive market, two companies will share the equal bargaining power.
Nicholson has the disadvantage in bargaining power; the company has relatively poor sales and profit performance in the recent years, conservative accounting and financial policies, and a low percentage of outstanding stock held by the Nicholson family and management. With this disadvantage, buyers are able to come in very easily, as what had happened on March 3, 1972. H.K Porter Company, a conglomerate with wide-ranging interests in electrical equipment, tools, nonferrous metals and rubber products, and owns 44,000 shares in Nicholson, which were acquired in 1967, came to Nicholson with its plan to tender immediately, 437,000 of 582,000 outstanding shares at $42 per share paid in cash This tender offer would end on April 4th(HBS pg 33).
Tender offer is a public, open offer or invitation (usually announced in a newspaper advertisement) by a prospective acquirer to all stockholders of a publicly traded corporation (the target corporation) to tender their stock for sale at a specified price during a specified time, subject to the tendering of a minimum and maximum number of shares (Dictionary.com); also, in a tender offer, the bidder contacts shareholders directly; the directors of the company may or may not have endorsed the tender offer proposal. Nicholson was alarmed by this proposal and its management must act quickly before Porter takes majority control of the company.
One concern from the Nicholson family management is: if Porter were to gain control of Nicholson, the family, only with 20% of outstanding shares, would lose all control. As for the remaining shareholders, the $42, a $12 premium is indeed very attractive, due to the low performance in Nicholson’s recent years; shareholders may take this opportunity to sell shares to make this profit. It is also said that companies with low bargaining power can improve their position and shareholder’s potential gains by adopting antitakeover measures. In this case, Nicholson, in no position to ignore Porter’s tender offer, must take on
Show More

Related Documents: Stock and Nicholson Essay

Cooper Industries Case

Cooper Industries Inc. 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…

Words 5572 - Pages 23

Cooper Case Study Essay

them a well known company. The major brand that Sears holds that could have competed with Cooper/Nicholson is the Craftsman brand, which was registered by Sears in 1927 and was recently names one of America’s most trusted brands. From 1970-73, the US economy grew by an…

Words 1956 - Pages 8

Cooper Industries Essay

The firm had been heavily dependent on oil and gas sector for its sales and major earning; fluctuations due to cyclic nature of industry concerned its management. Although long-term sales and earnings growth for Cooper had been above average, its stock was less attractive to investors due to higher risk and earnings volatility. Cooper’s earlier acquisitions resulted in diversity of markets but did not result in reduction of earnings volatility.To reduce the risk, management initiated an acquisition…

Words 865 - Pages 4

Case Study Of Equity In Equity

percent of capital gains tax would be quite substantial to his final profit margin. As he is looking for high return it may be important to be able to sell his initial investment quickly if better investment opportunities arise. This will require his stock choices to be liquid. In summary the main objectives of this portfolio will be to: 1) Have a high return on investment (This will be measured against an appropriate market index with an aim to beat it by at least five percent). 2) To minimise taxation…

Words 4672 - Pages 19

De Bondt Et All Single Paper

financial judgments and choices made by individual economic agents, and examines what the consequences are for financial markets and institutions. Investment portfolios are frequently distorted, with consequent excess volatility in stock and bond prices. Examples include the stock market crash of 1987, the bubble in Japan during the 1980s, the demise of Long-Term Capital Management, the Asian crisis of 1997, the dot-com bubble, and the financial crisis of 2008. Most everyone agrees that it is problematical…

Words 9682 - Pages 39

Essay about American History A Survey Chapter 2

failed (poor leadership, location, disease, food) except Capt. John Smith saved it by imposing work and order and organizing raids against Indians b)Reorganization i)London Company became Virginia Company 1609, gained expanded charter, sold stock, wish to grew VA colony with land grants to planters ii)Winter of 1609-1610= starving time iii)First governor Lord De La Warr arrived 1609, established harsh discipline w/ work gangs iv)Communal system didn’t work well, Governor Dale thought…

Words 3302 - Pages 14

Caffeine Essay

Coffea arabica is type of plant who's seeds are called coffee beans. (Duke, 1983). It is a small tree, up to 16 feet tall when unpruned, that takes about 8 months to mature. Arabica coffee beans make up about 75% of the worlds coffee beans (Nicholson, 2010). The amount of caffeine in coffee beans can differ between region, year, and preparation method but a typical Arabica bean averages 1.5 percent caffeine per unit of mass. As general rule of thumb one cup of coffee has 100mg of caffeine in…

Words 4232 - Pages 17

Tesla Motors Strategic Analysis Essay

Tesla Motors Strategic Analysis Prepared by: Lexen Beran Brenna Hayes Travis Heidemen Jenna Hughes Jake Latimer In Partial Fulfillment Of the Requirements For: MANGT 595: Business Strategy M/W/F at 12:30pm 1 Table of Contents Table of Contents…………………………………………………………………...……2 Executive Summary……………………………………………………………………...3 Introduction………………………………………………………………………………4 External Analysis………………………………………………………………………...5 Internal Analysis…………………………………………………………………………8…

Words 4479 - Pages 18

intermediate accounting 2 test bank Essay

Intermediate Accounting Kieso 15th Edition Test Bank Click here to download the solutions manual / test bank INSTANTLY!!! http://www.solutionsmanualtestbanks.com/2013/05/intermediate-acc ounting-kieso-15th-edition-test-bank.html Intermediate Intermediate Intermediate Intermediate Accounting Accounting Accounting Accounting Kieso Kieso Kieso Kieso 15th Edition Test Bank 15th Edition Test Bank Weygandt Warfield 15th Edition Test Bank Weygandt Warfield 15th Edition Test Bank…

Words 8328 - Pages 34

Ebooks Solution Manuals and Test Banks for Text Books Essay

Dear all, If u need anything from the list, do contact us anytime, we provide competitive prices and fast delivery after payment done. We are assisting students by providing them quality services regarding Solutions and Test Bank for courses. We hope that you people will like our service and get better grades. Please Contact us @ : solvedanswers@gmail.com solvedanswers@gmail.com Use CTRL + F to search the titles you looking for , if the title you searching is not in the list, do not…

Words 19224 - Pages 77