Cooper Case Essay

1518 words - 6 pages

Early in 1972 Nicholson dad to fend off a take over attempt by H.K. Porter Company Inc., which controlled 30.5% of the company's stock. Porter made a cash tender offer to stockholders. However, Porter did not get enough stock to take over Nicholson. In trying to fight the takeover Nicholson made several merger overtures to other companies like VLN Corp. A few years back, it had rejected an offer from Cooper Industries.
Cooper Industries & Nicholson
Cooper was interested in Nicholson because of its competitive strength in the hand tools industry. Nicholson had a 50% share for files and wraps with a very strong brand name and high quality line. It also had a 9% share of the 200 million handsaws and saw blades market with excellent brand & quality. It had a very effective and large distribution system across US, Canada and overseas. Cooper industries believed that Nicholson can achieve 6% annual sales growth and also bring down the cost of goods sold from 69% to 65% and selling and administrative expenses from 22% to 19%, thereby increasing its profitability. Cooper would be able to use Nicholson’s distribution system to cross sell Cooper’s hand tool lines in the industrial and consumer markets.
Cooper anticipated that the Nicholson acquisition would lessen its earnings volatility and currently Nicholson is in the merger market to fend off the raid by H K Porter Company.
Valuation of Nicholson File (without merger)
Please see Exhibit 1 and Exhibit 3 for details and assumptions
Assuming that Nicholson will continue to have sales growth equal to 2 % with cost of goods sold at 69% of the net sales, its market price will stay in the ($19 to $27 range in 1972) and ($22 to $31 in 1976) because of the operating in-efficiencies and lower profit margins (3% to 4 %) as also the un-certain ownership situation. Its share price is therefore lower then its book-value.
Its EPS will range from $2 to $2.25 over the next five years. Nicholson is getting a tax-rate of about 40%, lower than the 50% industry tax-rate because of investment tax credit and net income from partially owned foreign companies, especially in Europe.
Its stand-alone valuation as of 1972 will be $30.1 million and in 1976 will be $31.4 million on a book-value basis.

Valuation of Nicholson File as part of Cooper Industries
Please see Exhibit 2 for details and assumptions
Cooper Industries estimates that if Nicholson mergers with it, it will be able to move the EPS up to the $14 to $17 range, by bringing down the cost of goods sold to 65% from 69% of the net sales and selling expenses to 19% from 22%. This will increase the profit margin of Nicholson from 3% range to 10%.
Also, the Nicholson sales growth will increase form 2% to 6% because of synergies between the two companies and Nicholson will have access to both the industrial and consumer segment.
Its valuation will increase to $32 million in 1972 going up to $42 million in 1976.
Its share price under Cooper...

Find Another Essay On Cooper Case

"Deerslayer" by James Fenimore Cooper Essay

2267 words - 9 pages James Fenimore Cooper was born on September 15, 1789 in Burlington, New Jersey. He was the son of William and Elizabeth (Fenimore) Cooper, the twelfth of thirteen children (Long, p. 9). Cooper is known as one of the first great American novelists, in many ways because he was the first American writer to gain international followers of his writing. In addition, he was perhaps the first novelist to 'demonstrate...that native materials could

Lutron and Its Competitors: Cooper and Creston

970 words - 4 pages Lutron has two local and global competitors on the market that are Copper and Crestron. Cooper came on the market with the first gear-driven rear truck axle product. Over the years with the research for automobile industry, Copper named to the FORTUNE 100 for the first time. In the last decade of 20th century, Cooper went through a period of portfolio rationalization, to diminish its exposure to more cyclical industries such as automotive and

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

2433 words - 10 pages if it is successful in acquiring Nicholson? What should Cooper's management do to facilitate successful integration?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 strategyCooper could become a major factor in the hand tools business given its expertise in manufacture of

James Fenimore Cooper

2738 words - 11 pages James Fenimore Cooper was one of the pioneers in American novel writing. Cooper used the life and things he had experienced and turned them into best-selling novels that have held up throughout the years. He became famous with the publication of the wilderness adventures. Along with the success these books brought, so to came some criticism. To truly understand Coopers books you have to delve deeply into them and know from where he got the

Anna Julia Cooper

2438 words - 10 pages Anna Julia Cooper "Only the BLACK WOMAN can say 'when and where I enter, in the quiet, undisputed dignity of my womanhood, without violence and without suing or special patronage, then and there the whole . . . race enters with me'" The life of Anna Julia Cooper (1858-1964) affords rich opportunities for studying the developments in African-American and Ameri can life during the century following emancipation. Like W.E.B. DuBois

Cooper Industries Cooper Industries was formed during the early 1920s

566 words - 2 pages Cooper IndustriesCooper Industries was formed during the early 1920s and they are manufacturers of heavy machinery and equipment. The company also became principal producer of engines and massive compressors. Unfortunately, the issue of concern during that time was the company?s heavy release on sales to the oil etc and the fluctuation of earnings Cooper Acquisition strategy had to include the following: 1. The industry had to be one where by

Susan Cooper and Native Activism

1757 words - 7 pages In her book Spirited Encounters, Cooper mentioned “during her young adult life and through her museum career, she is interested in “Native activism,” especially “protests that focused on museums” (xv). According to her, Native Americans were protesting the museums in hoping that museums would give them back items that were once belong to them and their ancestors. For example, Native Americans’ request to get back Alcatraz Island from the

Early American Authors: Knight, Byrd, Cooper, Irvi

1316 words - 5 pages the Count should receive for the number of Hessians killed on American soil. When I ponder the reactions of those who read this in 1778, I can't help but laugh. I honestly like Benjamin Franklin, conceited as he was.Washington Irving & James Fenimore Cooper I have always been fond of Washington Irving's classic "Rip Van Winkle." I think the story is ingenious, yet at the same time I find it hard to believe it was not just adapted from

The Poets' Treatment of Love in I Wanna Be Yours by John Cooper Clarke, The Thickness of Ice by Liz Loxley and How do I Love Thee by Elizabeth Barrett

1068 words - 4 pages The Poets' Treatment of Love in I Wanna Be Yours by John Cooper Clarke, The Thickness of Ice by Liz Loxley and How do I Love Thee by Elizabeth Barrett Browning "I wanna be yours" by John Cooper Clarke, is made up if three stanzas, each ending in the title of the poem, "I wanna be yours". The first two stanzas of the poem follow the same basic poetic structure. The poem presents a more modern, rather than traditional view of

Write a review on your dream car - MINI Cooper

906 words - 4 pages When I was young, I was the critical romantic. I loved anything to do with pink and purple, flowers, love movies, candlelight dinners and two-seater convertible cars. To me, that was the meaning of romantic. As time has gone by, my perspective of what is romantic has changed a lot but, I don’t know why, I still think of sitting in a two-seater convertible with my lover as a perfect romantic dream. Guess what? Last Sunday, my dream became my

Caleb McDougal Rough Draft James Fennemore Cooper 2

779 words - 4 pages James Finermore Cooper was a revolutionary writer of his time and is still influencing writers today as a traditional writer of American Romanticism. He was born to William and Elizabeth Cooper in Burlington, New Jersey on September 15, 1789. Cooper’s father was a congressman during the Washington administration. Elizabeth was a member of a New Jersey Quaker family and William was the founder of a frontier settlement. At one year old, his

Similar Essays

Case Study Cooper Industries

2691 words - 11 pages http://www.essays24.com/print/Case-Study-Cooper-Industries/7711.htmlCooper IndustriesCase StudyJonathan De LeonAnn LewisMary J. RoyCrystal VincentUniversity of Phoenix OnlineAdvanced Problems in FinanceFIN 545William CrockettSeptember 5, 2005Cooper Industries Inc.Based on the given information in the case study regarding the acquisition of Nicholson File Company by Cooper Industries, there is no question that Cooper should try to gain control of

Case Study Cooper Tire And Rubber Company

2334 words - 9 pages Introduction"Cooper Tire & Rubber Company, founded in 1914, specializes in the manufacturing and marketing of rubber products for consumers. Products include automobile, truck and motorcycle tires, inner tubes, NVH control systems, automotive sealing, and fluid delivery systems." (http://www.coopertire.com/about/).The case study on Cooper mainly concentrates on the tire industry, andTherefore the following analysis will be based on

Cooper Industries Case Study

604 words - 2 pages sets along with products such as hand tools and light fixtures.The company bid a $21-a-share tender offer to acquire Champion Spark Plug, manufacturer of auto spark plugs, as a counter offer for the Dana Corp.'s $17.50-a-share bid. Also, in the mean time, Cooper Industries was considering a $700 million bid for Cameron Iron Works. Even though purchasing either or both companies will give operational and organizational advantages, there were high

Cooper Industries Essay

2691 words - 11 pages http://www.essays24.com/print/Case-Study-Cooper-Industries/7711.htmlCooper IndustriesCase StudyJonathan De LeonAnn LewisMary J. RoyCrystal VincentUniversity of Phoenix OnlineAdvanced Problems in FinanceFIN 545William CrockettSeptember 5, 2005Cooper Industries Inc.Based on the given information in the case study regarding the acquisition of Nicholson File Company by Cooper Industries, there is no question that Cooper should try to gain control of