If you are citizen of an European Union member nation, you may not use this service unless you are at least 16 years old.
You already know Dokkio is an AI-powered assistant to organize & manage your digital files & messages. Very soon, Dokkio will support Outlook as well as One Drive. Check it out today!
Page history
last edited
by PBworks15 years, 8 months ago
Mergers and Acquisitions
Mergers are structured as either:
cash for stock. You pay money for shares of a company. Simple.
stock for stock (more risk). To ease fears that the acquiring firms stock might fall (and lessen the value of the deal), many firms offer insurance (up to a point), that they will cover the difference with cash. This type of program is often called a "contingent value rights"(CVR) plan. This can be thought of as a "put option" in that the deal gurantees a minimum price to sell shares. It is a creative way for financial managers to overcome hurdles and to complete a deal.
Fear of a takeover of the firm if the share price drops too low should help to eliminate the potential conflicts of interest between shareholders and managers of corporations. If the firm were to become a takeover target (by private equity or by other firms), then its likely that outside investors would believe that the firm has more value potential than is currently reflected in the share price. They might believe that a change in management is all that is needed to unlock share price value, so they may force a takeover (LBO) and replace management. This threat of a takeover should force management to act in the best interests of shareholders.
The deal is the largest ever cash purchase of a private venture backed technology company, according to data from VentureSource. See table below. This could be painful for EMC. Dell it the largest distribution partner of Clariion, EMC’s product that competes with EqualLogic’s. “I’m sure [EMC Chief Executive] Joe Tucci woke up with headache,” said Greg Gretsch, managing partner at Sigma, an early investor at EqualLogic.
EqualLogic, based in Nashua, New Hampshire, is hot because it bet early on a new standard for storage systems called ISCSI, which allowed the building of so-called Storage Area Networks (SANs) on Ethernet. The technology, which makes storage Internet based and locally available, makes storage for large companies more efficient and less costly than alternative technologies.
EqualLogic is focused entirely on this market, while larger competitors EMC and Network Appliance have continued to serve older technologies, even if they’ve focused more aggressively on ISCSI of late.
This ends a long ride for EqualLogic, which almost accepted a $35 million offer in 2002, when the market turned downward and the outlook was bleak. Sigma’s Gretsch tells me that Sigma and CRV encouraged the company to slog on. The company’s momentum developed in recent years, however, and in July it filed for an IPO. It was ready to proceed with the offering as of last week, but the company decided to postpone the IPO until tomorrow to see if Dell would make its offer — and it did.
EqualLogic opted for the purchase because of the risks inherent in being a public company. The investors were willing to take it public, but the management team decided the $1.4 billion in cash wasn’t such a bad thing. The company was profitable for the last year, and had $37 million in revenue for the most recent quarter. It signed up 500 customers last quarter, said Gretsch.
In this wiki, you will find a collection of the students notes on a variety of global issues, with a focus on international finance, international relations, politics and business. Clearly not all of the content is our own, nor do we endorse students opinions posted on our pages. There have been many contributors to this site, and our role is just to moderate the content and make sure it fits the "GloboTrends" theme. We try to link properly and send readers to other interesting news sites. If you see any inappropriate material, please let us know.
What are "GloboTrends?"
“GloboTrends” are fundamental underlying trends, which means that they are important, but might not be obvious. Many trends are interconnected, and have global implications. Not paying attention to the development of global trends in can come back to haunt any business person, and so… we have dedicated ourselves to summarizing these events in simple language, and we are trying to show how these events might be important to different regions, and to different industries.
Comments (0)
You don't have permission to comment on this page.