Professional Documents
Culture Documents
2015PGP091
Reservation Price
Starshine
$ 51
Belvino
$ 38
It was clear that merger with Belvino would mean that Starshine has
to change its strategy completely and reduce its marketing costs.
Hence, the reservation price was intended to be quoted less in order
to compensate for the cultural difference.
Also, since management was also reluctant to merge with Belvino
and the stock price of Belvino was on the downfall, it was assumed
that the merger with Belvino would be considered only if the deal
occurred at a price very close to the current stock price of Belvino
($ 36)
Increase in Domestic Revenues ($M) = $ 25 ( Lower bound of the
expected range has been considered, as it will reduce Belvinos
reservation price)
Reduction in Other SG&A ($M/year) = $ 4.5 (Lower bound of the
expected range has been considered, as it will reduce Belvinos
reservation price)