Gap Analysis: Lester Electronics

Gap Analysis: Lester ElectronicsUniversity of PhoenixWeek FourOctober 20, 2008MBA/540 ? Maximizing Shareholder WealthBased on the scenario for Lester Electronics, Inc. it has been determined the conjunction is heading in a new direction. Implementing the new muckle began with the decision to merge miscellany and Shang Wa and will feed down to employees to increase sales. While opposition is not an ply for the companies, a hostile takeover threat could conquer the efforts of unification completion. Efficient financing options will enable the new unify company to explore all avenues logically feasible and arise to initiate the infallible steps. The overall outcome will be beneficial to the company, the employees and the shareholders.

Situation AnalysisIssue and Opportunity IdentificationLester Electronics (LEI) has been the sole distributor of capacitors for the consumer and industrial products manufactured by Shang-Wa. LEI never marketed this product outside(a) the United States and managed to achieve and maintain annual revenue of $ cholecalciferol million. Shang-Wa allows LEI to renew this contract annually with the stipulation of purchasing $1 million wholesale for 65 years.

This agreement whole shebang well for both companies until recently when an offer was made by a competitor called Transnational Electronics Corporation interested in acquiring LEI. Due to growing demand Shang-Wa realizes more have is required although Mr.



Lin is reaching his peak and prepares for retirement. In establish to head away from his company; Mr. Lin wants to ensure LEI is able to purchase this company and continue the process opportunities currently in place.

LEI has decided to merge with Shang-Wa, as a stable and useful company this merger will give Shang-Wa the finances required to remain competitive. One financing problem presented is the rate of growth for LEI compared to Shang-Wa, a basic rule to acquisition valuation is to ensure NPV to shareholders is positive. Mergers...

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