The strategic merit is that both companies Mercury and AGI, are footwear companies that attract the youth market. See our Privacy Policy and User Agreement for details. 8% CAGR during the forecast period. This is just a sample partial case solution. Liedtke is evaluating the company in order to find outwhether the future benefits justify or surpass the present value of the investment inMercury.Analysis:In order for Liedtke to get a broader picture on the acquisition of Mercury, he needs tocompare and analyze a list of financial data from 2006 to 2011; projected balance sheetaccounts, operating results and free cash flows, and cost of capital calculations. John Liedtke, head of the businessdevelopment for Active Gear, Inc saw it has a possible opportunity for them to acquire it.The footwear industry is very competitive, with low growth and stable profit margins.AGI is very profitable but it is smaller than its competitors, which is becoming adisadvantage. John Liedtke, the head of business development for Active Gear, a mid-sized athletic and casual footwear company, saw the potential acquisition of Mercury as a unique opportunity to roughly double the size of his business. Mercury Athletic Footwear - Acquisition Analysis ACTIVE GEAR COST OF CAPITAL ASSUMPTION Tax Rate Cost of Debt Risk Free Rate Expected Market Return Market Risk Premium Asset βeta Debt-to-Value Ratio Debt-to-Equity Ratio Equity Beta 40.0% 6.00% 4.93% 10.43% 5.50% 20.0% 25.0% 0.970 CASH FLOW AND OPERATING ASSUMPTIONS Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. This datawill enable him to identify the strengths and weaknesses of this acquisition.First lets look a summary of the operations of both AGI and Mercury Athletics’ actualoperations based on the last year given 2006 before AGI plans of acquiring Mercury. If you continue browsing the site, you agree to the use of cookies on this website. See our Privacy Policy and User Agreement for details. Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. Is Mercury an Appropriate Target for AGI? 4 a. Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. Women’s casual footwear is Mercury’s worst performing product that is may help AGI to achieve a lower acquisition price. In 2017, Asia Pacific led the athletic footwear market and is estimated to be the fastest growing region between 2018 and 2026. TAF®, previously known as The Athlete's Foot®, was the world's first franchisor of athletic footwear stores. Price war between competitors Cheap replicas available in the market Conclusion. Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. If you continue browsing the site, you agree to the use of cookies on this website. The newer trend of safety footwear looking and wearing like comfortable athletic shoes and casual dress shoes and boots is also continuing at an accelerated pace. Mercury Athletic Footwear – Acquisition Analysis. Mercury athletic footwear Group 7 Contents Executive Summary & Overview of Problems 3 Analysis on Mercury acquisition 4 1. Mercury Athletic Essay Sample. The company was founded more than 60 years ago by Kihachiro Onitsuka and is now a leading designer and manufacturer of performance athletic footwear, apparel and accessories. Mercury Athletic Footwear Mercury Athletic Footwear Mercury Athletic Footwear ... 2008, Pp. Footwear retailer Footgear to boost footprint with acquisition of Edcon divisions. NIKE, Inc., based near Beaverton, Oregon, is the world's leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a … The market is expected to grow annually by 6.4% (CAGR 2020-2025). Reasons why Mercury is an appropriate target for AGI 4 2. John Liedtke, the head of business development for Active Gear, a mid-sized athletic and casual footwear company, saw the potential acquisition of Mercury as a unique opportunity to roughly double the size of his business. Free shipping on many items. https://www.slideshare.net/JBGough/acquisition-of-mercury-athletic The concept, founded in 1971 in Pittsburgh, Pennsylvania, began domestic franchising in 1972 and opened its first international store in Adelaide, Australia in 1978. To assess the situation properly, a discounted cash flow analysis is being carried out. Mercury Potential to double revenues Increase leverage with manufacturers Increase long run growth rate Expand presence with key retailers and distributors. After being purchased by West Coast Fashions,Inc., Mercury Athletic, a footwear division, did not make satisfying performance on the whole. MERCURY ATHLETIC FOOTWEARProblem statement:West Coast Fashions, Inc a large business of men’s and women’s apparel decided todispose of one of their segments; Mercury Athletic. Mercury Athletic Footwear’s Men’s Casual sector was disrupted by bad weather and strikes ... WACC Calculations Acquisition Rationale. Such a move would result in divesting the corporation of its hold over Mercury Athletic, a wholly-owned footwear subsidiary. Consumer interest in safety shoes, steel toe rubber boots and overshoes now drives a new market that removes a noticeable gap between safety and casual footwear. The NPV is finally calculated as $2,361,366.68, thus the estimated value of mercury is calculated to be $2,361,366.68. Producer and supplier of products and services for correctional facilities. Acquiring Organization: Hibbett Sports Headquartered in Birmingham, AL, Hibbett Sports has a simple philosophy: it's all about the customer. If you continue browsing the site, you agree to the use of cookies on this website. Looks like you’ve clipped this slide to already. The company partners with name-brand companies and creates its own private-labeled brands for the correctional market. We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. Active Gear, Inc Mercury AthleticRevenues $470, 286 m $431,121 m% Of Revenue Product 42 % athletic / 58 % casual 79 % athletic / 21 % casualOperating Income $60.4 m $42,299 mRevenue Growth $2-6% 12.5 %. Active Gear, a mid-sized athletic and casual footwear company, is looking into the possible acquisition of Mercury Athletic as it might be the opportunity for … Active Gear, Inc. (AG), a privately held footwear company, was contemplating an acquisition opportunity. Is Mercury an appropriate target for AGI? Mercury Athletic Footwear . If the acquisition price is less than the present value of future cash flows then Active Gear Company should proceed with the investment. Business The Deal Makers: 2020's Top M&A Players 12 hours ago Business Evans Is the First Arcadia Brand to Be Sold — Here's Its New Owner 4 days ago Placed 1st out of 100 total competitors. ACTIVE GEAR COST OF CAPITAL ASSUMPTION Tax Rate Cost of Debt Risk Free Rate Expected Market Return Market Risk Premium Asset ?eta Debt-to-Value Ratio Debt-to-Equity Ratio Equity Beta 40.0% 6.00% 4.93% 10.43% 5.50% 20.0% 25.0% 0.970 Mercury Athletic Footwear Case Solution. In the case discussed, Active Gear Inc. (AGI) is contemplating an acquisition of Mercury Athletic Footwear (MAF). The athletic footwear market is expected to reach US$ 60.5 Bn by 2026 with 5.3% CAGR during the forecast period from 2018 to 2026. City Gear City Gear is a specialty retailer of premium athletic footwear, apparel and accessories. This is just a sample partial work. 1. DOWNLOAD HI-RES / PHOTO DETAILS. We believe that Mercury is an appropriate target for AGI since an acquisition can be an excellent growth opportunity. Daniel Fiore, the founder of Mercury, sold the company to West Coasts Fashion, a large designer of women’s and men’s branded apparel, in late 2003. 4050 SEPTEMBER 18, 2009 TIMOTHY A. LUEHRMAN JOEL L. HEILPRIN Mercury Athletic Footwear: Valuing the Opportunity In March 2007, John Liedtke, the head of business development for Active Gear, Inc., a privately held footwear company, was contemplating an acquisition … In January 2007, West Coast Fashions, Inc., a large designer and marketer of branded apparel, announced a strategic reorganization that would result in the divestiture of their wholly owned footwear subsidiary, Mercury Athletic. Now customize the name of a clipboard to store your clips. The purchase price of the acquisition ($157,290,000) was estimated using the price per earnings ratio of a comparable company in the footwear industry given in case Exhibit 3. 1-5). The offer price represents a premium of 34.2% over the closing price of Reebok’s stock on August 2, 2005. Adidas has come a long way over the decades and is now positioned second largest & most popular player in the athletic footwear industry. 1-5). AGI Mercury Athletic Footwear $470.3 Million Sales Revenue in 2006 42% Revenue - Athletic Footwear 58% Revenue - Casual Footwear Among the best profit margins in the Industry Prosperous, Active, and Fashion-Conscious Brand Image. The Business plan on Mercury Athletic Case. However of late, there has been some drop in sales because Athletic footwear is mainly designed for sports or other forms of physical exercises and are used by athletes and climbers. See our User Agreement and Privacy Policy. NIKE, Inc. (NYSE: NKE) plans to release its fourth quarter fiscal 2019 financial results on Thursday, June 27, 2019, at approximately 1:15 p.m. PT, following the close of regular stock market trading hours. If you continue browsing the site, you agree to the use of cookies on this website. We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. Introduction: Mercury. (The final amount is … Case Meeting – Discussion of Group Case #4h Mercury Athletic Footwear Case - The case uses the potential sale of Mercury Athletic Footwear (hereafter, MAF), a mid-size athletic and casual shoe company, to teach undergraduate and the first-year MBA students the basic discounted cash flow valuation using the WACC. It is ... We assume a premium of 10% for the purchasing price … Estimation the value of Mercury based on discounted cash flows and Liedtke’s base case projections. https://www.slideshare.net/antonesc/mercury-athletic-footwear-12492757 Strategically analyzed the potential acquisition of Mercury Athletic Footwear by Active Gear Inc. Air Force clothing initial issue section chief Vernalynne Carter and 502nd Logistics Readiness Squadron Commander Air Force Lt. Col Ernest Cage issue new American-made athletic footwear to Air Force recruits Daniel Sterling, right, and Ryan Padro, second right, at Joint Base San Antonio-Lackland, Texas, Jan. 3, 2019. AGI Mercury Athletic Footwear $470.3 Million Sales Revenue in 2006 42% Revenue - Athletic Footwear 58% Revenue - Casual Footwear Among the best profit margins in the Industry Prosperous, Active, and Fashion-Conscious Brand Image. The transaction value is approximately €3.1 billion (U.S. $3.8 billion) including the assumption of net cash of €69 million (U.S. $84 million). 1. Mercury Athletic Footwear Mercury Athletic Footwear Mercury Athletic Footwear ... 2008, Pp. 4 a. Estimation of the weighted average cost of capital 5 b. China: Revenue in the Footwear market is projected to reach US$66,102m in 2020. Daniel Fiore, the founder of Mercury, sold the company to West Coasts Fashion, a large designer of women’s and men’s branded apparel, in late 2003. That is why customer satisfaction and loyalty are very important to Belle international company’s future. Men’s athletic footwear is the leading product for Mercury Athletic. This analysis allows for the evaluation of cash in-and-outflows to assess Mercury´s current financial performance by discounting them back to present value, and adding a “Terminal Value”. In January 2007, West Coast Fashions, Inc., a huge designer and promoter of branded clothes, made public a strategic restructuring that would lead to the divestiture of their completely owned footwear subauxillarysidiary, Mercury Athletic. There will be no requirement for separate financial statements for Mercury. Please place the order on the website to get your own originally done case solution Mercury was founded in 1968 and they designed and produced athletic and casual footwear for both men and women. Business The Deal Makers: 2020's Top M&A Players 12 hours ago Business Evans Is the First Arcadia Brand to Be Sold — Here's Its New Owner 4 days ago 4050 SEPTEMBER 18, 2009 TIMOTHY A. LUEHRMAN JOEL L. HEILPRIN Mercury Athletic Footwear: Valuing the Opportunity In March 2007, John Liedtke, the head of business development for Active Gear, Inc., a privately held footwear company, was contemplating an acquisition opportunity. 4 a. 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