This is just a sample partial work. 8 billion by 2026, rising at a market growth of 11. Should AGI purchase Mercury? Men s athletic footwear is the leading product for Mercury Athletic. We believe Mercury Athletic Footwear is an appropriate target for AGI to achieve such a goal for following reasons. 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 … https://www.slideshare.net/JBGough/acquisition-of-mercury-athletic If you continue browsing the site, you agree to the use of cookies on this website. If the acquisition price is less than the present value of future cash flows then Active Gear Company should proceed with the investment. Due to strategy reorganization, WCF wanted to shed this segment. Strategically analyzed the potential acquisition of Mercury Athletic Footwear by Active Gear Inc. 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. Mercury Athletic Footwear Case Solution. Estimation the value of Mercury based on discounted cash flows and Liedtke’s base case projections. If you continue browsing the site, you agree to the use of cookies on this website. Such a move would result in divesting the corporation of its hold over Mercury Athletic, a wholly-owned footwear subsidiary. Estimation the value of Mercury based on discounted cash flows and Liedtke’s base case projections. 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 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 … First, through the acquisition AGI can take the advantages of some existing synergies. To assess the situation properly, a discounted cash flow analysis is being carried out. Customer Code: Creating a Company Customers Love, Be A Great Product Leader (Amplify, Oct 2019), No public clipboards found for this slide, Attended Mayo College Girls' School, Ajmer. Mercury Athletic 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. China: Revenue in the Footwear market is projected to reach US$66,102m in 2020. Clipping is a handy way to collect important slides you want to go back to later. Acquisition of Mercury Athletic Consumer interest in safety shoes, steel toe rubber boots and overshoes now drives a new market that removes a noticeable gap between safety and casual footwear. Mercury Potential to double revenues Increase leverage with manufacturers Increase long run growth rate Expand presence with key retailers and distributors. Mercury Athletic Footwear: Valuing the Opportunity 3861 Words | 16 Pages. City Gear City Gear is a specialty retailer of premium athletic footwear, apparel and accessories. Why or why not? Now customize the name of a clipboard to store your clips. 4 a. The athletic footwear market is expected to reach US$ 60.5 Bn by 2026 with 5.3% CAGR during the forecast period from 2018 to 2026. Mercury is specialized in designing and distributing the branded athletic and casual footwear. Mercury Athletic Footwear Case Solution. 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 … Athletic footwear is mainly designed for sports or other forms of physical exercises and are used by athletes and climbers. For footwear players, the time to buy — and sell — could be now. Mercury Athletic Footwear Mercury Athletic Footwear Mercury Athletic Footwear ... 2008, Pp. 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. 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 … In 2003 the company was sold to West Cost Fashions and one of the first steps after the acquisition was the create an apparel line in an … Clipping is a handy way to collect important slides you want to go back to later. 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 Given AGI’s stated merger and a cquisition goals, the size of Mercury, the market segment served, geography, and the price all appear to fit. Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. 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 %. ... We assume a premium of 10% for the purchasing price … The price per earnings ratio was then applied to the 2006 Mercury net income. Is Mercury an Appropriate Target for AGI? 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 … https://www.slideshare.net/antonesc/mercury-athletic-footwear-12492757 The market is expected to grow annually by 6.4% (CAGR 2020-2025). Producer and supplier of products and services for correctional facilities. Find great deals on Mercury Men's Athletic Shoes when you shop the huge selection of new & used sneakers on eBay.com. Mercury athletic footwear Group 7 Contents Executive Summary & Overview of Problems 3 Analysis on Mercury acquisition 4 1. After being purchased by West Coast Fashions,Inc., Mercury Athletic, a footwear division, did not make satisfying performance on the whole. Imports are also affected by the various styles and trends followed by consumers. 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. In the meantime, Active Gear, Inc., (AGI) Mercury Athletic Footwear Mercury Athletic Footwear Mercury Athletic Footwear ... 2008, Pp. 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. Acquiring Organization: Hibbett Sports Headquartered in Birmingham, AL, Hibbett Sports has a simple philosophy: it's all about the customer. 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 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. -Founded in 1968 by Daniel Fiore -Producer, designer and distributor of branded athletic and Women s casual footwear is Mercury s worst performing product and post-acquisition the line may be discontinued by Active Gear. Reasons why Mercury is an appropriate target for AGI 4 2. 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. 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 … Mercury Athletic Footwear: Valuing the Opportunity Active Gear, Inc. (AGI) is a privately held footwear company and is contemplating the possibility of acquiring Mercury Athletic Footwear. The company's products include seafood, snacks, soup, nuts, skin & hair-care products, personal care products, apparel, athletic footwear and electronics. Such a move would result in divesting the corporation of its hold over Mercury Athletic, a wholly-owned footwear subsidiary. [6] The selling price of a manufactured product consists of two items: its cost to the manufacturer and the manufacturer’s profit. Proposed a starting bid of $250MM, as well as a maximum bid of $400MM due to several synergies created. 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. You can change your ad preferences anytime. If the acquisition price is less than the present value of future cash flows then Active Gear Company should proceed with the investment. 4 a. Estimation of the weighted average cost of capital 5 b. We believe that Mercury is an appropriate target for AGI since an acquisition can be an excellent growth opportunity. 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. 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 By Dineo Faku Jul 16, 2019 For example, the “athleisure” trend continues to dominate U.S. consumer spending on athletic footwear: sales of athletic footwear grew 2 percent to $19.6 billion in 2017, and sport leisure is the largest category in athletic footwear. Introduction: Mercury. Please place the order on the website to get your own originally done case solution This is just a sample partial case solution. The Global Luxury Footwear Market size is expected to reach $46. 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. Footwear market size was valued at $365.5 billion in 2020, and is estimated to reach $530.3 billion by 2027 with a CAGR of 5.5%. Mercury athletic footwear Group 7 Contents Executive Summary & Overview of Problems 3 Analysis on Mercury acquisition 4 1. Instead, it went through a decline in EBITDA margin on average, resulting from the inappropriate expanding and discounting strategies. Estimation the value of Mercury based on discounted cash flows and Liedtke’s base case projections. Mercury athletic footwear Group 7 Contents Executive Summary & Overview of Problems 3 Analysis on Mercury acquisition 4 1. 1. DOWNLOAD HI-RES / PHOTO DETAILS. BIRMINGHAM, Ala.--(BUSINESS WIRE)--Oct. 29, 2018-- Hibbett Sports, Inc. (NASDAQ/GS: HIBB), an athletic specialty retailer, today announced that it has signed a definitive agreement to acquire privately held City Gear, a city specialty retailer of premium athletic footwear, apparel and accessories with 135 stores in 15 states. (The final amount is … Mercury Athletic Footwear – Acquisition Analysis. Each company in the industry today is trying to reduce its manufacturing costs by shifting the production to Asian markets. The strategic merit is that both companies Mercury and AGI, are footwear companies that attract the youth market. If you continue browsing the site, you agree to the use of cookies on this website. Athletic footwear refers to those shoes that are designed for sports and other outdoor activities. shopping at a particular footwear store (Wong, 2004). The company partners with name-brand companies and creates its own private-labeled brands for the correctional market. Is Mercury an appropriate target for AGI? See our User Agreement and Privacy Policy. The concept, founded in 1971 in Pittsburgh, Pennsylvania, began domestic franchising in 1972 and opened its first international store in Adelaide, Australia in 1978. Footwear retailer Footgear to boost footprint with acquisition of Edcon divisions. You can change your ad preferences anytime. Mercury Athletic Footwear: Valuing the Opportunity Active Gear, Inc. (AGI) is a privately held footwear company and is contemplating the possibility of acquiring Mercury Athletic Footwear.West Coast Fashions Inc., a large designer and marketer of men’s and women’s branded apparel recently announced that it plans to shed its Mercury Athletic Footwear subsidiary. 1-5). Adidas has come a long way over the decades and is now positioned second largest & most popular player in the athletic footwear industry. Reasons why Mercury is an appropriate target for AGI 4 2. The price is the amount of money paid for products or services according to the set/agreed terms and as such is a marketing tool. 1 March 8, 2017 Harvard E-2720 Mergers and Acquisitions Mercury Athletic Authors: Steven Washburn, Brandon Cobb, Boyu Wu Case Questions a. 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 … Following the news release, NIKE management will host a conference call beginning at 2:00 p.m. PT to review results. Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. 1. See our Privacy Policy and User Agreement for details. Reasons why Mercury is an appropriate target for AGI 4 2. Active Gear, Inc. 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. 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. See our User Agreement and Privacy Policy. Customer Code: Creating a Company Customers Love, Be A Great Product Leader (Amplify, Oct 2019), Trillion Dollar Coach Book (Bill Campbell), No public clipboards found for this slide. 1. The offer price represents a premium of 34.2% over the closing price of Reebok’s stock on August 2, 2005. However of late, there has been some drop in sales because It is Estimation the value of Mercury based on discounted cash flows and Liedtke’s base case projections. RE: Mercury Athletic valuation and acquisition recommendations. We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. Mercury Athletic is the footwear division of West Coast Fashions (WCF), a designer and distributer of branded athletic and casual footwear, targeted at youth market. 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. In the case discussed, Active Gear Inc. (AGI) is contemplating an acquisition of Mercury Athletic Footwear (MAF). Mercury is specialized in designing and distributing the branded athletic and casual footwear. Race Roster was founded by five childhood friends with a combined … Is Mercury an Appropriate Target for AGI? [4] Net prices do not include any Mercury Athletic Footwear Case Solution. Active Gear, Inc. (AG), a privately held footwear company, was contemplating an acquisition opportunity. Mercury Athletic Essay Sample. West Coast Fashions, Inc. (WCF), a large designer and marketer of men’s and women’s branded apparel recently announced plans for a strategic reorganization. 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. 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. The owner of Famous Footwear and brands such as Sam Edelman and Dr. Scholls announced today that it has acquired comfort footwear label Vionic for $360 million. Mercury Athletic Footwear Case Solution. Spring Semester, 2016. 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 objective of the acquisition is to improve firm size, increase growth rate and expand market share. 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. Mercury was founded in 1968 and they designed and produced athletic and casual footwear for both men and women. 4 a. Women’s casual footwear is Mercury’s worst performing product that is may help AGI to achieve a lower acquisition price. 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”. JB Gough 4 a. Men’s athletic footwear is the leading product for Mercury Athletic. 8% CAGR during the forecast period. 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. Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. 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). Target customers are urban and suburban family members aged 25 to 45. There will be no requirement for separate financial statements for Mercury. Mercury has some characteristics that should be considered: Mercury, is a footwear company that aim at urban and youth market, one of the most lucrative customer target in the industry. The strategic merits of acquiring Mercury from Liedtke’s perspective. Executive Summary: The famous shoe Company with the swoosh logo has gone from strength to strength, since its inception in 1962, headquartered at Beaverton, Oregon to emerge as an industry leader – the most competitive sports and fitness company(www.nike.com). Price war between competitors Cheap replicas available in the market Conclusion. 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. Harvard Business School case study completed for my Intro to Finance course final project. Looks like you’ve clipped this slide to already. Mercury competes in four main product lines: men s and women s athletic and casual footwear. In order to summarize, due to AGI’s small size, there is a strong risk of being overtaken by the other giant players in the market therefore, if it acquires Mercury, the risk will be minimized and there is a strong opportunity that the company will grow steadily. About Race Roster. Free shipping on many items. The Business plan on Mercury Athletic Case. Placed 1st out of 100 total competitors. Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. See our Privacy Policy and User Agreement for details. Athletic Footwear Market Overview. Looks like you’ve clipped this slide to already. Therefore, Liedtke believes that if they takeover Mercury will doubleAGI’s revenue, increase it’s leverage with contract manufactures and expand its presencewith key retailers and distributions. U.S. Exports That is why customer satisfaction and loyalty are very important to Belle international company’s future. 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. Introduction: Mercury. Now customize the name of a clipboard to store your clips. 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’s Men’s Casual sector was disrupted by bad weather and strikes ... WACC Calculations Acquisition Rationale. Mercury athletic footwear Group 7 Contents Executive Summary & Overview of Problems 3 Analysis on Mercury acquisition 4 1. Global Athletic Footwear Market is expected to reach $114.8 billion by 2022, growing at a CAGR of 2.1% during the forecast period 2016 - 2022. 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