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
US GAAP follows the Historical Cost Concept in valuing the cost of Long-Term Assets. Explain this principle and how it compares to the standards used in the reporting of Long-Term

ACT presently is all-equity financed. This reflects the stance of the former CEO, a dominant personality who stated repeatedly: "I don't want us to be in thrall to the demands of t

Q. Which one of the following is not necessary in order for a corporation to pay a cash dividend? a. Adequate cash b. Approval of stockholders c. Declaration of dividends by the bo

Ace Company has a 30 percent marginal tax rate and uses a 12% discount rate to compute NPV. The firm started a venture that will yield the following before-tax cash flows: year 0,

Whereas dividend may be of prime significance to some equity shareholders, this may not be so for the other shareholders. Several shareholders may be interested in receiving a usua

On 1 January 2009, a company, Yeti, granted an employee the right to choose between (i) 30,000 Yeti shares or (ii) a cash-payment equivalent to the price of 24,000 Yeti shares on 3

ORDER OF PAYMENTS The bankrupt’s estate must be distributed in the following order. 1. Cost and charges: Costs and charges properly incurred in administering the estate mu

Uniform Capitalization Rules- These are a set of rules intended to be a single comprehensive set of rules to govern capitalization, or inclusion in INVENTORY of indirect and direc

The rules of intestacy Agricultural land, crops and livestock in certain areas of Kenya are not covered by these rules; they are distributed according to the law or custom of t