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Mergers and Acquisations (Essay Sample)

Instructions:

Write about a Merger of a Public Corporation with International Operations with another Corporation

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Content:

Merger, Acquisition, and International Strategies
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Professor’s Name
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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 Merger’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 company’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 merger’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
Allegiant Air is a domestic airline in the U.S that aims to provide scheduled and charter flights. Since its founding in 1997, it has yet to enter into a merger but there are current considerations to do so in coming years due to the changing nature of the airlines business. It is publicly traded though its revenue base is not as mighty as other established national and multinational airlines based in the United States of America (Manning, 2012). It embraces aggressive tactics to entice its customers by pitching them show tickets, hotels, rental cars and other forms of entertainment and gets commission as a result of those activities. This means that it maintains a very close relationship with its customers.
Southwest Airlines would be a very ideal corporation to merge with. Already, Southwest Airlines has an established base and ranks as the number one domestic carrier in the U.S. Allegiant air comes a close to it in ranking and has been attributed with success over the recent years considering that it has not been in business for a long time. Their operation’s models have proven a driving factor and merging of the two could only create a powerful local market airline. This would consolidate their operations and increase their revenues due to increased efficiency and expansion.
In terms of profitability, Southwest Airlines could provide resources in relation to fleets. As of now, the airline has more fleets and flies more often than Allegiant Airlines. A merger between the two would increase their flights and flying frequency. They would cover more markets and expand to cover more areas. Therefore, the proposed merger would not be the case of one company trying to elevate the other out of bankruptcy but rather a joining of forces to control the market.
International Business-Level Strategy and Corporate-Level Strategy for the Internationally Operating Corporation
The international business-level strategy by the new American Airlines Group Inc. aims at consolidating and retaining the market opportunities offered by the combination of the market power. As such, business decisions by the firm ought to consider varying consumer preference and also appeal to the consumers. With the merger, there is more increased power to compete and reach new markets. Decisions regarding venturing should be handled dynamically according to each international market so as to be in line with the profitability and expansion goal.
The same company has transformational and technological goals under its business strategy. These are instrumental in maintaining a competitive edge. The company cannot afford to do away with the developmental goals and keep in touch with the need to upgrade its flying assets. That is why the company plans to roll out new 59 jets all equipped with latest technologies that meet consumer needs. It is recommended that the company monitors the transformation process to go with the market needs as well as the customer needs. This avoids wastage of resources for unwanted or unnecessary equipment’s.
The business goal of the airline is to provide an integrated customer experience. The modernization process should keep customer preferences at the middle of it all. Customers want comfort and generally the best value for their money. It should remain the focus of the airline to offer just that.
The international market in which the airline operates in is subject to economic variations. Therefore, each destination comes with a challenge due to varied economic statuses. While the company strives to maintain its profits margins, it should not drive away the customers by reducing the affordability of its ...
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