MERGERS AND ACQUISITION

Mergers and Acquisition

Mergers and Acquisition- BAE takes over Babcock

Introduction

Mergers and acquisitions are transactions used by companies in order to achieve the strategic and financial goals. The consequences can be a combination of two businesses into one organization in such a way as to achieve new goals, jointly participating in the market (fusion) or acquire such number of shares (shares) of one company by another, which gives the possibility to control the whole, resulting bought the company is in some way incorporated into the structure of the acquirer (acquisition). The participants of the mergers and acquisitions the company may be quite different in terms of management style, organizational culture or value systems, hence the success of this operation depends on how effectively they are able to integrate with each other.

This paper focuses on the takes over Babcock by BAE and possible evaluation of taking over Babcock.

Discussion

Overview of BAE

BAE Systems plc is the fourth largest military contractor in the world and a commercial aircraft builder. BAE is a British company based in Farnborough, Hampshire and interests worldwide, particularly in North America through its subsidiary BAE Systems Inc. BAE was formed on 30 November 1999 with the merger of British Aerospace (BA) and Marconi Electronic Systems (MES), the defense subsidiary of General Electric (GEC). As a result of the merger, BAE Systems is the successor of much of the most famous aircraft and British defense systems (www.digitallook.com).

Overview of Babcock

Babcock International Group PLC (Babcock) based in London, United Kingdom is an engineering support services with key features include the management of assets and infrastructure, projects and programs that provide engineering expertise and integration. The company operates through four reportable segments, i.e., Navy and technology, defense and security, support services and international. Its customer base includes organizations of public and private sectors through airports, railways, communications, defense, education, emergency services, energy, mining and construction, nuclear, property management and formation. The company undertakes its activities throughout Africa, the United States, Middle East and United (uk.finance.yahoo.com).

Analysis of BAE to takes over Babcock

Reason to Take over Babcock

This industry is characterized by many small establishments that typically confine operations to a regional market or to specialized niche activities. The industry displays a low concentration of ownership, with the four largest companies contributing only 14.0% of industry revenue in 2012. Despite the low concentration of ownership, a significant proportion of revenue is derived from medium and large firms. Consequently, the 50 largest enterprises generate nearly 40.0% of industry revenue in an industry with more than 140,000 firms.

Having contacts within key markets: Babcock will establish networks and a reputation among the key players in each market in order to be invited to tenders.

Fast adjustments made to changing regulations: Firms must understand and adapt to a changing regulatory environment.

Ability to compete on tender: Successful firms are capable of winning contracts through tender while ensuring adequate cash flow without compromising long term profitability.

Ability to quickly adopt new technology: Technological advancements (production and construction technologies) impact the capacity of firms ...