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Sony-MGM Merger Summary

Sony-MGM Merger Summary. Reasons for increase in the stock price of Sony. Confidence among investors regarding the profitability of the merger.

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Sony-MGM Merger Summary

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  1. Sony-MGM MergerSummary

  2. Reasons for increase in the stock price of Sony Confidence among investors regarding the profitability of the merger. Great amount of interest shown by the business partners of Sony such as Texas Pacific Group, Providence Capital Inc. and others, in financing this deal. Established and reputed brand name having a trust of a large no. of customers.

  3. Reasons for decline in the stock-price of MGM • Borrowing of a large amount for paying the dividend of $8 per share. • Open declaration of the intention to get acquired by an organization. • Not enjoying the confidence of the shareholders after the announcement of its merger prospects with Sony.

  4. Potential impact on the combined capital of the merged entity • Tremendous increment in the combined capital of the merged entity. • Increase in the scope of the business and sustained long-term profitability. • Large market share, enhanced debt capacity and lowered financial costs. • Enhanced power against buyers as well as the suppliers.

  5. References Pandey, I.M. (2007). Financial Management, 8th Edition. Delhi: Vikas Publishing House. Horne, J.C. (2008). Fundamentals of Financial Management, 10th Edition. Delhi: Pearson Education Limited. Wall Street skeptical of Sony as Lion tamer. (2008). Retrieved March 29, 2008, from http://www.variety.com/article/VR1117903697.html?categoryid=18&cs=1.

  6. Continued….. One day left on Sony-MGM talk pact. (2005). Retrieved March 29, 2008, from http:// www.marketwatch.com/news/story/one-day-left-mgm-sonyexclusivity/story.aspx?

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