- The term “merger” denotes the act of combining two companies initially operating as separate entities to operate as a single entity in which case one new company would still continue to exist (Lussier & Hendon, 2013). The paper seeks to justify the possibility of a merger between Eurocopter and Enstrom Helicopter Corporation. It is clear that the two companies in question are involved in manufacturing through use of sophisticated technology to improve efficiency of performance as well as maximize profits. For successful mergers, an effective negotiation strategy is requisite (Lussier & Hendon, 2013).
- The first process of the negotiation should entail definition of the initial offer and parameters under which a deal would be possible. An offer of between 75% to 90% of the company’s true value should be placed to allow some room for negotiation. Should Enstrom strongly fight a takeover attempt, Eurocopter would bypass the target’s management and make a 60 million dollar tender offer directly to shareholders who would intern put pressure on the management to accept the merger.
The next step should entail negotiation of terms that would lead to successful integration. The target firm should be clearly described to make the negotiation meaningful including variations in companies’ revenue. Determine whether the target company has legal ownership of their property. This merger, for instance, would help the two companies to navigate major challenges like the great recession that Enstrom suffered in the year 2010, which significantly slowed its output to only six units and saw its value drop to 37.5 million Dollars. Besides, this agreement will enable the partners to best position themselves to exploit the currently upcoming markets in Asia and Africa, especially given that Enstrom has a very good background in China while Eurocopter has ventured into South Africa.
- The merger negotiation should also discuss personnel matters to ensure that acquired talents remain in place while avoiding pressure tactics and using time for own advantage. With Eurocopter having 23000 employees compared to Enstrom’s 174 employees, it is likely that the resistant would not be high from the latter since all its employees would also easily be absorbed and their roles reorganized to ensure their job security after the merger. This is due to the anticipated short-term growth and possible expansion, which means that they would need this pool of experienced labor.
- It is equally important to mention that bringing together Eurocopter, and Enstrom would essentially lower the overall cost of capital, considering that all the personnel from both companies would be retained. Given that Eurocopter enjoys a wide market in France and many other European countries through its four main plants and 32 subsidiaries and participants across the world within just a span of two decades. The merger would in essence increase Enstrom Helicopter Corporation an easy access to this emerging market; hence increase its global relevance and competence (Lussier & Hendon, 2013).
- Finally, with a contract drawn and signed, the merger would help further conquer the great market and neutralize impacts of other competitors for their common good. Similarly, the merger would be very crucial in promoting high-level innovation through the use of the existing human resources with excellent skills requisite to fuel innovation to even greater heights. Particularly because the Eurocopter Company, for instance, is known for its contribution into the many historical helicopter “firsts” over time. The first ever helicopter to be certified fly over icing conditions. Given the extensive experience coupled with the very best team of Enstrom experts, the merger is likely to culminate into creation of a world class helicopter company whose resultant innovative products would completely satisfy the demands of the modern market. This would be through realization of intellectual capital focused on innovative thinking for faster development.
References
Lussier, R. N., & Hendon, J. R. (2013). Human resource management: Functions, applications, skill development. Thousand Oaks: SAGE Publications.
