Mergers & Acquisitions now is playing crucial role in modern corporate finance world.
For any prospects, there is only one reason for a firm making an offer to M&A another firm, which is creating value. The ultimate purpose/motivation of any M&A is to benefit from synergy for both acquiring firm and target firm.
Applying to facing situations of our firm, firstly we will benefit from reduced level of competition after successful M&A. this will solve the difficulties of increasing competition of main market. Meanwhile, strong revenue growth forecast as the bar chart shown below, UK has the highest potential of future market growth; this will help boost our current declining profit margin. For the purpose of reorganising and altering business portfolio of products, it is sensible decision for board that decide to invest in UK market.
In addition, for Sainsbury, it has also become the largest Fair-trade retailer in the world in February 2010. This will particularly help to improve the public image problem we are facing at moment. Also Sainsbury has relatively good record of corporate governance and corporate social responsibility.
This shows that employees being treated as fair condition. Moreover, Sainsbury applied them to commit in reducing the impact on the environment and aim to be leader in the UK for environmental innovation. This will help bring the corporate public image green.