business strategy-vertical horizontal or conglomerate , Financial Accounting

What was the business strategy underlying the merger? How was the acquisition financed? Was it a vertical, horizontal or conglomerate merger?

 The strategy behind those mergers was to manage through economic cycles and volatile fuel prices, invest in fleet, improve services for the customers and achieve strategic objectives as the Delta airlines was strong in the south and the east and to Europe whereas Northwest was strong in the Midwest and across the pacific. They could have a more attractive product for their customers by putting both together. This merger was considered to give them benefits like more effective air craft utilization, a more comprehensive and diversified route system, diminished overhead and improved operational efficiency. 

The merger was valued at $ 3.4 billion.  This amount was derived from

i)  By issuing 339 million shares of Delta common stock at a price of $9.60/share.

ii) Capitalized Merger-related transaction costs.

 The purchase price also included the fair value of Delta stock options and other equity awards issued on the closing date in exchange for similar Northwest's securities. Northwest stock options & other equity awards vested on the closing date and were assumed by Delta and were modified to provide for the purchase of Delta common stock. The number of shares and, if applicable, the price of 1 share were maintained for the 1.25 exchange ratio. Earned stock options held by employees of northwest were considered part of purchase price.

         737_purchase prize list.png

Vertical, Horizontal or Conglomerate merger:

It was a vertical merger as both of the companies were engaged in same business of air carriage.

Posted Date: 3/12/2013 2:54:03 AM | Location : United States







Related Discussions:- business strategy-vertical horizontal or conglomerate , Assignment Help, Ask Question on business strategy-vertical horizontal or conglomerate , Get Answer, Expert's Help, business strategy-vertical horizontal or conglomerate Discussions

Write discussion on business strategy-vertical horizontal or conglomerate
Your posts are moderated
Related Questions
1) Inventory of raw material are held to make sure that the production process is not disrupted because of shortage of raw material. The amount of raw material inventory would base

Are revenue and expense accounts permanent accounts and should not be closed at the end of the accounting period?

Aristo Ltd uses a system of absorption costing. The product passes through a machining department and an assembly department before it is completed. The assembly department is labo

what is the profitability of

How to determine the depreciation To determine depreciation in straight-line method, take cost of the asset, less the trade-in value, and divide by the estimated years of usefu

On June 30, 2011, Omara Co. had outstanding 8%, $3,000,000 face amount, 15-year bonds maturing on June 30, 2021. Interest is payable on June 30 and December 31. The unamortized bal

Moore Corportation follows a policy of a 10% depreciation charge per year on all machinery and a 5% depreciation charge per year on buildings (the corportation uses the nearest ful

Cleary, Wasser, and Nolan formed a partnership on January 1, 2010, with investments of $100,000, $150,000, and $200,000, respectively. For division of income, they agreed to (1) in

The comparative balance sheet of Portable Luggage Company at December 31, 2008 and 2007, is as follows An examination of the income statement and the accounting records revealed th

a. Conversion cost was 140,000 and was four times the prime cost b. Direct materials used in production equaled 5,000 c. Cost of goods manufactured was 154,000 d. Ending work in pr