cooper case
What are the concerns and what are the bargaining positions of each group of Nicholson stockholders? What must Cooper offer each group in order to acquire its shares?
Introduction :
Nicholson File Company was faced with poor sales and low profit performances conservative accounting policies and a very low percent of outstanding stick which was held by the Nicholson family. the management was also functioning badly .The family had no interest in joining forces with people from outside and the company suffered from dogmatic management principles largely family based .Nicholson’s shareholders were the two primary units. One was the Nicholson family y and the other were the KG Porter and other shareholders .
Nicholson’s stockholders:
KG Porter company was one of the major stockholders of Nicholson company with over 44.000 shares which it purchased in 1967 and was a very participative shareholder. In 1972 Porter conveyed that they would like to tender 437,000 shares of Nicholson for 584.000 outstanding shares at $2 per share to be paid in cash . The offer would expire if the Nicholson management did not accept Porter’s offer by aril 4th . Nicholson’s concern at this offer was that, once the deal happens Nicholson would just become another operating department of porter’s . Nicholson’s felt that Porter’s quest for high profits may lead to aggressive cost cutting and elimination of certain product lines which were marginal revenue earners. There will also be loss of control .
Though the offer of $42 in cash was at a premium of $12 on current stock prices and with the stock of Nicholson doing quite low in recent years ,such an offer would be irresistible to the 4,200 stockholders of Nicholson . Since the Nicholson family owned only 20% it was expected that it was too little to have control over Nicholson if this offer from Porter is taken up .the VLN and Nicholson merger took place at mutually agreeable terms .
Cooper’s offer to different
Introduction :
Nicholson File Company was faced with poor sales and low profit performances conservative accounting policies and a very low percent of outstanding stick which was held by the Nicholson family. the management was also functioning badly .The family had no interest in joining forces with people from outside and the company suffered from dogmatic management principles largely family based .Nicholson’s shareholders were the two primary units. One was the Nicholson family y and the other were the KG Porter and other shareholders .
Nicholson’s stockholders:
KG Porter company was one of the major stockholders of Nicholson company with over 44.000 shares which it purchased in 1967 and was a very participative shareholder. In 1972 Porter conveyed that they would like to tender 437,000 shares of Nicholson for 584.000 outstanding shares at $2 per share to be paid in cash . The offer would expire if the Nicholson management did not accept Porter’s offer by aril 4th . Nicholson’s concern at this offer was that, once the deal happens Nicholson would just become another operating department of porter’s . Nicholson’s felt that Porter’s quest for high profits may lead to aggressive cost cutting and elimination of certain product lines which were marginal revenue earners. There will also be loss of control .
Though the offer of $42 in cash was at a premium of $12 on current stock prices and with the stock of Nicholson doing quite low in recent years ,such an offer would be irresistible to the 4,200 stockholders of Nicholson . Since the Nicholson family owned only 20% it was expected that it was too little to have control over Nicholson if this offer from Porter is taken up .the VLN and Nicholson merger took place at mutually agreeable terms .
Cooper’s offer to different