6 pages/≈1650 words
Business & Marketing
Mergers and Acquisations (Essay Sample)
Write about a Merger of a Public Corporation with International Operations with another Corporationsource..
Merger, Acquisition, and International Strategies
Merger of a Public Corporation with International Operations with another Corporation
Recently, a U.S judge approved a merger between the American Airlines and the US Airways Group to form at the time of approval what would be the biggest air service provider for cargo and transport. The American Airlines, under AMR Corporation was serving at least 50 nations and rendering its cargo and passenger services across 260 airports in the covered nations. The merger was valued at close to $18 billion. The completion of the merger brings a new name-American Airlines group Inc. (Dillingham, 2013).
It is evident that the American Airlines which operated under the AMR Corporation was on a down trend in terms of operations and profitability. Its plan for reorganization by merging with the US Airways was a strategic way of saving it from insignificance in air travel. It had filed for bankruptcy and the U.S Bankruptcy went ahead to approve the merger plans despite having a pending anti-trust lawsuit (Dillingham, 2013). Following the state of the American airlines and the provisions of the Chapter 11filings, the management of the American airlines would be taken by the top management from the U.S Airways.
The Mergerâ€™s Strategy
To determine whether this merger was a wise one, there is need to check on several aspects of this deal such as investments, stocks and effects of management and control among others. Additionally, the inspection of several elements of the merging companyâ€™s strategy is essential. One of the main aims of the American Airlines was to get out of its increasing debt to creditors while also tapping into new market destinations, increase its profits and also increase employee benefits. The merger would provide a way to remedy the stock performance of American Airlines and possibly come up with a common stock that can perform better. Since a merger signals a common company, a new stock is issued and prescribed closing and opening conditions set. The performance of the stock is likely to be strengthened through combined efforts to control the airline market and harmonize efforts to work in the common interest of the merged company. Evidently, the shares of the newly merged company rose by 2.7% on the initial day of trading. It was a sign of emerging benefits. The fact that the new company would be repay the American airlines creditors plus interest within two years was a viable solution to solving the bankruptcy of AMR Corporation.
Stakeholders are projected to derive more benefits from the merger as well as avoid losses from the merger not sailing through. The investors of US Airways and the stakeholders in American Airlines can anticipate an enhanced value. This acknowledgement by the parties served as a driving factor towards the success of merger despite several setbacks such as the antitrust lawsuit. This is the best action that the stakeholders would take. Supporting the merger not only saved the American Airlines but also set a platform for them to gain more from their investments. In all essence, this would place the newly formed company in a better position to increase their returns from investments.
The mergerâ€™s strategy also had its competitors in sight. The merger was meant to consolidate enough power and resources to compete with rival airlines that also accredit merging as their reason for rising. The employee position in the merging strategy had their interests in mind as it would make the company to be more competitive and also have a firm financial basis. This serves as a source of numerous career opportunities and chances for career development. Generally, the merger was a fair one for the employees and they knew this as supported by their widespread approval. The operations of the newly formed company would be streamlined to deal with the prevalent competition and possibly move to become the dominating airline across the global destination it covers. Since the strategy had benefits to human resources who stand out as a significant factor in any airline operations and also incorporated other benefits, the merger passes a wise one especially considering the present market conditions and the future.
Locally Operating Corporation not Involved in any Merger
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