Ducati & Texas Pacific Group Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Ducati & Texas Pacific Group Case Study Solution

Introduction:

Texas Pacific Group wants to purchase a controlling stake in world’s leading motor cycle manufacturing company named “Ducati” which is based in Bologna, Italy. On the other hand, Ducati is the family business of Cagiva Group. The Cagiva group is facing tough times and Ducati is the only profitable and highly earning group of the family. However, Ducati is also facing few financial crises which include shortage of working capital.

Texas Pacific Group has already made many negotiations in the time period of one year. Now the management of TPG Company is frustrated and wants to walk away from the deal of acquisition

Risks:

The main risks that would be faced by the company by acquiring Ducati would be:

Italian law of insolvency which increases the risks of insolvency due to decrease in working capital of the company
The negotiations had been too long and are anticipated to take further time.
The management of the company is not efficient and incapable.
The payback goals are higher and tougher, which would be not be possible for the company to achieve in a limited time span.

Solutions:

The solutions of these risks and problems to be faced by the company are as follows:

The asset sale strategy would help company to overcome the issue of Italian law of insolvency as it would increase the working capital of the company.
Letter of intent can help the company to limit the time period of negotiations and can decrease its span of time
If the TPG Company would be successful to acquire Ducati, the efficient management of TPG would help Ducati Company’s management to be more efficient.
In order to deal with tougher payback goals issue, the company can develop deals with suppliers, which would increase the company’s supply chain and higher sales would be generated.

Alternatives:

Company has two options of either to walk away or to purchase Ducati. If the company would be walking away, the advantages of high potential with red numbers would be achieved. Moreover TPG would also be able to generate high returns and control existing risks. In addition, the positive forecasting could be developed. Also, the brand exposure of TPG Company would be higher and its value would be increased. The company would experience stable and adequate financing structure. On the other hand, the disadvantages that would be experienced by the TPG Company if it would walk out from the deal are that the company would lack the strategic values. In addition, the undermined risks would always be associated with the company.

If the company would be acquiring the “Ducati” company, TPG would be able to make profits as it would be benefiting from Ducati and its financial profitability in such a feeble financialsituation. It would require TPG Company to develop, improve and increase its potential in public in order to sell the company for higher price in the future and earn profitability until it is under its management.

Ducati & Texas Pacific Group Harvard Case Solution & Analysis

Solution:

It is recommended to the company that it should buy the company as it facilitates company with lesser risks and higher benefits. Moreover, Nissan Company has recently purchased Mitsubishi Motors in 2016 pricing $2.3 billion. (IQ, 2016)

Similar Mergers:

Sunoco logistics and Energy Transfer Partners were merged successfully by making payment of $21 million.
Qualcomm successfully acquired NXP Semiconductors for $47 million in 2016.................

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