Shang-wa of Korea and Lester Electronics, Inc. (LEI) manufacture electronic parts for various industries. Upon news of Shang-wa CEO John Lin's retirement, competitors have determined that his company is a good buying opportunity. Mr. Lin would prefer to sell to his friend at LEI, CEO Bernard Lester, because Lin's belief is that Lester's company is fully capable of maintaining the daily operations of Shang-wa. After a thorough analysis from LEI analysts and a pro-forma financial sheet, the board of LEI recommended that the two companies combine into one entity. The following discussion analyzes the various means of financing the impending merger, reviewing various methods that will help LEI achieve the goal of the merger. An optimal solution is suggested including how the plan will be implemented. Finally, this paper will identify how the results will be evaluated.
Several stakeholders are prevalent throughout this merger process. His or her interests, rights and values could conflict with one another. Therefore, identifying stakeholders is important and the affect the merger will have on their perspectives and ethical dilemmas. The first group of stakeholders is the board of directors of Shang-wa. They have an interest in receiving a fair offer that could enable John to retire while simultaneously holding value for the company. As previously mentioned, company value and shareholder wealth have a direct relationship with one another. John's friendship with Bernard Lester should have no bearing on the board's decision to accept the offer from LEI. The board has the right to review all offers and make a sound decision that will yield the highest value. This might conflict with John's intentions, but John could accept the deal if he is convinced that another tender offer (i.e. TEC) would be in the best interest of the firm. The board values honesty, decisiveness, candor and fairness.
The second group of stakeholders is the board of directors of...