Plan objectives:
The basic objective is to acquire a high growth player in the cement industry. J K Cement offers an opportunity to consolidate the current UltraTech into a single, more successful, brand. Ultratech offers a sophisticated and industry leading cost leadership, access to customers, and distribution channels. An acquisition of Shree cement would plug the J K Cement products with UltraTech. This could lead to strong synergy through the coupling of the J K Cement rapid growth and UltraTech efficient distribution and capacity networks. This will also help UltraTech diversify its portfolio. More specifically, we expect sales of UltraTech to grow for the next five years as a result of UltraTech distribution network. Negotiation Strategy:
The key buyer/seller issues in negotiation are:-
a) Representations and Warranties: These are assurances made by the…show more content… In this case, generally the acquiring company rolls out a public offer in cash or stock terms and the target firm’s management publicly approves the buyout with the consequent approval from the shareholders of the target company.
Friendly takeover is a basically an acquisition of the assets or shares of one entity by another with the prior approval of the shareholders and directors of both the entities. Shareholders of the target company are offered the shares of the acquiring company. Another way is to purchase controlling interest or assets of the shares of the target company. The combination of resources enables both the companies to take advantage of the economies of scale and also helps in eliminating the redundant divisions by streamlining the operations.
In the case of UltraTech Cement and JK Cement, there is a possibility of friendly transaction by purchasing controlling interest through use of stock, debt and