Professional Documents
Culture Documents
STUDY
Presented by: Tyla Webber, Freddy Seageng and
Sven Muller
Introduction
The following case will represent various
facts regarding decisions of Monmouth
Incs management team regarding the
future movements of the organisation to
acquire the Robertson Tool Company
who is a leading manufacturer of hand
tools.
Introduction (cont)
Monmouth-
1. One of the leading producers of motors as well as
compressors which forced natural gas through pipelines
and oil wells.
2. Management became concerned that the company was
too dependent on sales into these industries which had
large fluctuations.
3. Earnings had been above average but there were still
concerns that there was a decreasing interest in the stock.
4. Efforts by Monmouth to lessen the volatility in their
markets proved to be unsuccessful. They moved forward
on various business acquisitions but were still left in a
highly sensitive position within the economic conditions.
Introduction (cont)
Monmouth-
5. Launched full review of the companys acquisition
strategy- Found that they should only acquire
leading companies.
6. Companies were selected in order to ensure that
Monmouth would be able to become a major player
within the industry.
7. Industry also had to be stable.
8. Monmouth then expanded into the hand tool
industry through acquisition of the Kroll Electric
Corporation but was not as successful with the
Robertson Tool Company.
Introduction (cont)
Robertson Tool Company-
1. One of the largest domestic
owned.
Introduction (cont)
The case involves a bidding contest between Monmouth as well
as two other companies which are making final tender offers to
gain control as they have already acquired part of the
outstanding Robertson stock.
We aim to answer the following questions-
WACC
Weighted Average Cost of Capital
*assumed Beta of 1
Ke = rf + (rm rf)