Cooper industry, H.K. Porter Company and VLN Corporation

Introduction

Cooper industry, H.K. Porter Company and VLN Corporation are entangled in a battle over the takeover of Nicholson File Company.

Both H.K. Porter Company and VLN Corporation have already made their offers to the Nicholson File Company shareholders and now the management of Cooper Industry have to decide whether to jump into the foray for the control of Nicholson File Company or not.

The major issues faced by the management of Cooper Industry are as following:

1. Is Nicholson File Company an attractive acquisition target for Cooper Industries? Specifically, what synergies can be created by merging these firms, and in what other aspects is Nicholson an attractive target? In what respect, if any, is Nicholson not an attractive target? Overall, is there sufficient strategic fit to justify pursuing this acquisition?

2. What sort of integration issues is Cooper Industry likely to face if it is successful in acquiring Nicholson? What should Cooper's management do to facilitate successful integration?

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3. What should be the range of prices Cooper Industries should be willing to pay for each share of Nicholson's stock, in case it wants to acquire the firm?

Strategic Analysis - how does Nicholson fit into Cooper's acquisition strategy

Cooper could become a major factor in the hand tools business given its expertise in manufacture of machine tools. Moreover, one of the main problems that Cooper faces currently is a large cyclicality in its business, characteristic of the heavy machine tool industry, but more pronounced because of its dependence on Oil and Gas industries. These industries are heavily correlated with the state of the economy. So when there is a slowdown, Cooper would be one of the first companies to go down - something that they would want to avoid through diversification by way of acquisitions. The hand tools...