Running head: FINANCING ALTERNATIVE PAPER
Financing Alternative Paper
University of Phoenix
Financing Alternative Benchmarking
Lester Electronics Inc., (LEI), a consumer and industrial electronics parts master distributor, has made the decision to go forward with a merger with Shang-wa, a capacitor manufacturer in Korea. LEI currently market its products to small and medium sized original equipment manufacturers, repair facilities and small local distributors throughout the Americas and Europe. In the past 35 years, LEI and Shang-wa had an exclusive supply agreement that allowed LEI to sell Shang-wa’s capacitors in the United States. In the agreement which, must be renewed annually, Shang-wa cannot sell capacitors to anyone else that would sell them in the United States. LEI will be merging with Shang-wa because they believe the merger creates an opportunity to increase LEI’s value. Lester Electronics Inc. will use benchmarking as a tool to identify other company’s practices when confronted with the same situation. According to Investorwords, benchmarking is, “a standard, used for comparison. For example, the Nasdaq may be used as a benchmark against which the performance of a technology stock is compared” (2008). The following benchmarked companies will address issues such as the weighted average cost of capital (WACC); financing mix that optimizes structure, risks associated with investment decisions and dividend policies on wealth maximization.
AT&T merger with BellSouth
AT&T is a telecommunications company that offers services such as wireline, wireless and high speed broadband (Marketline, 2008). AT&T provides both local and long distance services. According to Marketline, AT&T is headquartered in San Antonio, Texas, primarily provides its services in the United States and employs about 310,000 people. On December 29, 2006, AT&T officially acquired BellSouth Corporation and gave BellSouth stockholders 1.325 shares of AT&T common stock for...