Being the CEO of a Schneider SA, a leading French multi-national company in electrical distribution and industrial automation, Didier Pineau-Valencienne (DPV) is starting to believe that the joint venture with U.S based company, Square D has indeed failed. Since the past two years, negotiations have been taking place to decide whether to call off the project or to go forward with the tender, and if so then what price should be paid. The case attempts to address various issues simultaneously. At one end it talks about the importance of strategic fit between the bidder and the target while also discusses the nature of the financing acquisitions at the other end. Interestingly, the case asks for the readers to personally analyze the role of Wall Street’s risk arbitragers when making the buying and selling decisions. For better understanding, one must understand the judgements of the Schneider’s moves and those of Square D while also assessing the appropriate price for the acquisition. Teaching direction: the case is specifically designed to be used in Corporate Finance courses, Advanced International Corporate Finance courses and those being relevant for the top and middle management levels. However when talking with respect to the MBA level, the case is best suited for the end, due to its comprehensive nature. The case is a perfect amalgamation of issues like strategic fit, valuation, financing, corporate control and governance. It can be also used by students while attempting to give detailed presentations on corporate valuation, thus covering areas like derivation of free cash flows, cost of capital, and levering betas. For executive education purpose, the case must be taught without relying much on the quantitative approach but instead should involve a participative discussion on strategy, target performances, characteristics and corporate governance.
Estimated Submission On |