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Assignment 1: Business Acquisitions Due Week 3 and worth 150 points Use the Internet or Strayer Library to research two (2) publicly traded U.S. companies and download their financial statements....

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Assignment 1: Business Acquisitions

Due Week 3 and worth 150 points

Use the Internet or Strayer Library to research two (2) publicly traded U.S. companies and download their financial statements. Assume that you are the CEO of one of the selected companies. You are responsible for gaining control over the other company. You have three (3) choices, any of which you believe that the Board of Directors will support.

  • Choice 1: Your company acquires 35% of the voting stock of the target company.
  • Choice 2: Your company acquires 51% of the voting stock of the target company.
  • Choice 3: Your company acquires 100% of the voting stock of the target company.

Write a four to five (4-5) page paper in which you:

  1. Provide a brief background introduction on both the company that you are working for and the company that you are responsible for gaining control over.
  2. Specify the overall manner in which the acquisition fits into your company’s strategic direction. Next, identify at least three (3) possible synergies that could occur as a result of the proposed acquisition.
  3. Select two (2) out of the three (3) choices provided in the above scenario and analyze the key accounting requirements for each of the two (2) choices that you selected. Next, suggest one (1) strategy with which you would prepare the financial statements for your company after the acquisition under each of the two (2) choices.
  4. Select the choice that you consider to be the most advantageous to your company. Explain to the Board of Directors at least three (3) reasons why your selected choice is the most advantageous to the company.
  5. Assume that two (2) years after the acquisition, your Board of Directors wants to offer the shares back to the public in hopes of making a large profit. Assume that in each of the two (2) years your company and the target company have had the same reported net income as they did in the year of acquisition. Determine the type of value (i.e., cost of fair value) that you would use to report the subsidiary’s net asset in the subsidiary’s financial statements, which the company will distribute to the public with the public offering. Provide support for your rationale.
  6. Use at least three (3) quality academic resources in this assignment.Note:Wikipedia and similar websites do not qualify as academic resources.
Answered Same Day Jul 18, 2021

Solution

Khushboo answered on Jul 24 2021
131 Votes
1. Companies selected and
ief background of the companies selected:
We have selected two companies for consolidation and acquisition analysis which are as below:
· Exxon Mobil Corporation
· Chevron Corporation
We are the CEO of Exxon Mobil and are targeting to gain control over Chevron Corporation.
Exxon Mobil is an American MNC which is listed on New York stock exchange and is into oil and gas field. The company is headquartered at Irving, Texas and was founded in year 1999. The major
ands of the corporation are Exxon, mobil, chemical and Esso. In year 2018, the corporation was awarded as second largest company in USA in fortune 500 ranking and known as one of the largest oil company in world. There are more than 71000 employees across the globe and major products are crude oil, natural gas, petrochemicals and electricity generation (BOSCHMA, R. and HARTOG, M, 2014).
Chevron Corporation is also an American MNC which is listed on New York stock exchange and is into oil and gas field. The company is headquartered at San Ramon, California and was founded in year 1879. In year 2020, the corporation was awarded as fifteen largest company in USA in fortune 500 ranking and known as one of the largest oil company in world. There are more than 52000 employees across the globe.
2. Acquisition strategy and synergy benefits:
Exxon Energy has adopted long- term growth strategy under which the entity is concentrating to capture high- value opportunities and huge cash flows potential in future. The entity has adopted the strategy to acquire or invest in such corporations which are having positive cash flows from operations, favorable cost environment supported profitability and having cash flows growth capacity (Bjerke B, 2012). Further the company aim to improve shareholder’s value which can only be increased by acquiring or investing in those companies which are having earnings and on path of clean and sustainable environment (Exxon Mobil, 2020). The company’s plan is to invest around $35 billion into capital expenditures by year 2025 which can only be possible by acquiring the companies like Chevron Corporation. Thus, the acquisition of Chevron Corporation will fit into corporation strategy of Exxon.
By acquiring the Chevron Corporation, the major synergy benefits will be as below:
· The acquisition will capture major of the portion of oil and gas segment in world and the company will...
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