MGT 487 LafargeHolcim Merger Mini-Case QUESTIONS WITH ANSWERS (ALL CORRECT)

MGT 487 LafargeHolcim Merger Mini QUESTIONS WITH ANSWERS (ALL CORRECT) LafargeHolcim Merger Mini-Case 1. Of the “Reasons of Acquisitions” discussed in the chapter, which reasons are the primary drivers of Lafarge-Holcim merger strategy? Lafarge and Holcim thought merging as equals would create a firm with enhanced and significant competitive abilities, and the leaders of the two firms concluded that together they would have the most balanced and diversified portfolio in the building materials industry. 2. Given that there have been performance difficulties of this “merger of equals”, which of the “Problems in Achieving Acquisition Success” do you believe have most likely affected this deal? Well, mergers of equal are always more fragile to bring together. The transaction between Lafarge and Holcim almost fell apart in March 2015. Holcim had first agreed to the $44 billion merger but then rejected the deal’s terms due to a perceived undervaluation of Holcim. That is a common issue between mergers of equals. 3. The new CEO, Jan Jenisch, has undertaken a reconstructing strategy. Why do you think the market reacted negatively to this plan? The market reacted negatively to his plan because he decided to cut costs, sell assets and focus on fewer markets essentially directing the company towards a less profitable future. The case states the firm also announced that it would write off $4 billion in assets which shows weak signs of cash flow. After all this negative news, it only makes sense that the stock would drop 7 percent. 4. What would you suggest the firm do to improve it