Mergers and Value Creation

 Mergers and Value Creation Essay

MERGERS AND VALUE CREATION A CASE STUDY OF SIME DARBY BERHAD

EXECITIVE SYNOPSIS

Globalisation and the borderless community has brought with it increased competition in the commercial circles. In not as well distant another, only huge multinational and multicultural managing companies with economies of scale, globalised markets network, quality products meeting customers' expectations and taste yet somehow cost efficient could survive. Smaller sized companies with specialised, differentiated and amazing products is the exception for this trend. There are many examples of sectors impacted by globalisation which have considered the successful route of mergers and acquisitions (M& A). These included the airlines, banking, automotive and oil & gas companies.

Closer to home we have found the good M& A of the neighborhood banking market. Synergy Travel Berhad (Synergy Drive) is known as a Special Goal Vehicle (SPV) company system by CIMB Group's private equity arm together with the intends to merge all the assets and liabilities of Sime Darby Group, Kumpulan Guthrie Berhad, Golden Hope Plantations Berhad and half a dozen (6) of its shown subsidiaries. Consequently the merger of Sime Darby, Glowing Hope and Kumpulan Guthrie is considered ideal and on time to take advantage of financial systems of level, synergies and greater productivity and efficiency. Synergy Drive's plantation business would be able to copy the three huge multinationals in america which control the world's edible essential oils markets just like Cargill Integrated, Archer Daniels Midland (ADM) Company and Bungee Company. Historically, the financial overall performance plantation business can be seen being influence tremendously by the rates of palm oil and hence

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the palm oil industry can often be referred to as cyclical in characteristics. In order to ensure that profits will never fluctuate greatly, the planting business began their variation all over the value string or aptly termed as a fully integrated participant.

A good example is definitely PETRONAS, the place that the core organization is petroleum. Building within the sound base anchored on integration, value-adding and globalisation, PETRONAS whose their primary involvement with multinational olive oil companies began with development sharing contract has since moved its upstream business overseas and downstream activities very efficiently. Taking the cue from this, it would be strategic without a doubt for the plantation business to copy the way of PETRONAS by building up further both equally upstream and downstream sectors. Synergy Travel could maneuver from simply concentrating on the production of standard oleochemicals i. e. fat which are created from the splitting process, for the production of higher value-added products.

The creation of the largest plantation corporations by blending Sime Darby, Golden Hope and Kumpulan Guthrie may result in significant leads of cost and earnings synergies. The fee synergies amongst others include debt consolidation of contiguous estates, rationalisation of generator utilisation, unified procurement and logistic actions and consolidation of farms management and administrative features etc . The revenue synergetic effects would include leveraging about global strategic presence with the three firms and larger customer spectrum for growing market share. The sharing of best practices and management expertise could also even more enhanced the two cost and revenue synergetic effects. In addition to that, Synergy Drive capable to move forward with sustainable earnings gains,

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productivity, features, skills and expertise in its business operations and main competencies building. As a great enlarged organization, Synergy Drive would have the ability and ability to grow even more the planting and property business.

In 27 Nov 2006, Synergy Drive declared simultaneous gives to each from the participating corporations through Non-reflex General Offer (VGO) and Mandatory Basic Offer (MGO). Synergy Travel had offered eight (8) companies to buy all their...

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2 . Twelve-monthly Report Kumpulan Guthrie Berhad (2002, the year 2003, 2004, 2005 & 2006)

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