H. J. Heinz M&A Harvard Case Solution & Analysis

H. J. Heinz M&A Case Solution

Introduction

H.J. Heinz founded in the year 1869 by Henry j. Heinz. The company is operating in food industry and presenting range of products which helps the company to achieve significant growth and the company listed on New York stock exchange in the year 1946.  The company is operating in US, Europe, Asia and all around the globe; therefore the company has strong customers base which results in gradual increase in the revenue. The company focuses on both organic growth and strategic growth and acquired many food companies in order to increase its market capitalization,  number of customers and market share which helps the company to become a leading food company of the world.

h.j. heinz m&a case solution

h.j. heinz m&a case solution

Problem statement

 The company is performing well from last few years and it is expected that there is a significant potential of growth, therefore many investors such as 3G and Berkshire Hathaway present a proposal of $72.5 per share in order to acquire stake in H.J. Heinz. The management of the company is concerned that whether it is suitable or not to go with this deal of $72.5 per share and the management of the company is also concerned about the future consequences of the company and its stakeholders such as employees, shareholders and other stakeholders.

Issues to Consider for Mergers and Acquisitions

Consider synergies that drive M&A

There were different synergies that can be obtained through the mergers and acquisitions. Some of the synergies are defined as:

  • There will be synergy in operations. Since the acquired company might have extensive knowledge and the better work methods and procedures which will bring synergy in the combined operations. Moreover the combined operations of the cash generating units of both the company will result in better efficiency in the operations.
  • The company might secure new customers by using the customer base of the acquired company. In this regard the synergy is achieved in a way that the services that are being provided to the client by the acquired company will be now, as per demand by the client to give more services offered by the acquirer company, combined with the acquirer company. The combined service provided will be more cost effective.
  • The company will have cost reduction in the form that the company might eliminate the excess employees. There will be no need to make new hiring for a certain period of time that will save hiring costs. The acquired company will have some key employees that are highly skilled; the company will get additional benefit.
  • The company can also sell off the excess assets, such as machinery that is no more needed or is in excess in the combined asset portfolio. If both the companies has branches in the same area then one of the branch can be eliminated which will result in inflow of cash and reduction of cost.

Understand the impact of M&A on key corporate stakeholders

The effect of the mergers and acquisitions on the key corporate stakeholders will be:

Suppliers

The company after acquisition will become large and the production will also increases. Thus the company will become the large buyer of raw materials. In this way the company might get the higher bargaining power over the suppliers. The company might demand to have low cost of raw materials and with the highest quality. More suppliers will be available to be switch from.

Buyers

The company will get become cost competitive because of the low cost of production. The low cost of production will be achieved because of the synergies in operations it obtained through the merger and the low raw material prices. Thus the company can attract the new buyers by offering high quality products with less cost............

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