Write a 7 page analysis organized as follows:
• The problem definition of why this acquisition will not work
• The conceptual tools that you would use for the analysis including a roadmap of how you are going to go through the analysis that would lead to your conclusions.
• The analysis itself.
• What is your key conclusions
This material may consist of step-by-step explanations on how to solve a problem or examples of proper writing, including the use of citations, references, bibliographies, and formatting. This material is made available for the sole purpose of studying and learning - misuse is strictly forbidden.Introduction
As there has been increase in the competitiveness in the operating environment, organizations are using a range of strategies to consolidate and strengthen their market share so that they can benefit from scale and scope economies. Innovation is the need of the hour and sustaining market share is becoming very difficult for companies. In this report, two erstwhile giants AOL and Yahoo have been the focus that have been consistently losing their market share to competitors Google and Facebook. The possibility of a merger deal between the companies and the resulting value has been analyzed using strategic and financial analysis to determine whether the merger deal should go ahead.
Yahoo and AOL have online advertising as their core businesses. These businesses have been on a decline as the competitors are dominating the market with their size. Saba and Oreskovic (2014) have estimated that the merger of these entities would lead to synergistic benefits in terms of $1 billion of cost savings and the entities would also be able to increase their size and market share so that they can take over their closest rival Facebook. Since both of them are players in the online content business, they can pool their resources and remove duplicates along the supply chain.
As reported by Baig (2014), merger between the two companies is not a strategic move since merging two big companies does not guarantee success. Given the current operating competitive environment of Yahoo and AOL, this move would just lead to creation of a big company and would merely buy them more time before they fail....