Problem Solution: Lester Electronics

Running head: PROBLEM SOLUTION: LESTER ELECTRONICS

Problem Solution: Lester Electronics

MBA/540: Maximizing Shareholder Wealth

October 14, 2007

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Problem Solution: Lester Electronics

Lester Electronics is a consumer and electronics parts master distributor that markets its products to original equipment manufacturers. For many years, Shang-wa Company has had an exclusive supply agreement with Lester electronics. Now, the CEO of Shang-wa is wishing to retire and has no formal succession plans for the company's management. At the same time, Shang-wa is being pursued for a takeover by Transnational Electronics Corporation (TEC). Lester Electronics and Shang-wa Electronics are both upset over the take over possibility. Lester is set to lose 43% of their revenues if they lose Shang-wa as a supplier. Lester Electronics is also being pursued for a possible takeover by Avral Electronics. After much analysis, both Lester and Shang-wa agree that a merger between the two companies would be the best solution to maintain their relations and stave off takeover attempts by the two other companies (University of Phoenix, 2007).

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Mergers and Acquisitions (The Sopranos)

Lester believes that a merger between the two companies would be the best way to increase their shareholder's wealth. By merging, Lester will now have a global presence and should increase their market standing. However, there are several issues that Lester will have to address as a result of the merger.

Situation Analysis

Issue and Opportunity Identification

LEI goal is to expand beyond its current core. The environment currently surrounding their market creates a number of challenges ranging from hostile takeovers to increased competition. In their current situation, if LEI does nothing they will lose upwards of 45% of their expected revenue over the next five years. This lost would result from Shang-wa Electronics merging with Transnational Electronics Corporation. Additionally, LEI...