Cooper Case Analysis After Discussion Cooper Industries
Group Case Analysis: Cooper Industries, Inc.
MBAD 6235 Section 11
December 3, 2014
Elisabeth Goodson, Lynette Hammond, Wanting Hou, Sam Inman,
Qian Jin, Weisi Sun, Shumin Xu, and Yuru Zhang
I. Summary of the Problem
Cooper Industries was founded in 1919 as an equipment and heavy machinery manufacturer. Over time, Cooper Industries experienced significant growth through acquisitions. Nicholson File Company had been on Cooper's shopping list for years as a company to acquire.
What made Nicholson so attractive was its basic competitive strength. Cooper believe that acquiring Nicholson could reduce overcome its violent fluctuation of earnings. Nicholson had a 50% share for files and wraps with high quality line and strong name. Its hand saws and saw blades also had a very strong quality with 9% of the market. Cooper is also interested in Nicholson’s distribution system. Cooper believes that Nicholson will enjoy 6%-7% annual sales growth, cost of good sols reduced from 69% of sales to 65% and selling, general and administrative expenses form 22% of sales to 19%, which showed a great profitability.
Nicholson, a family-owned a managed hand-tool business, had not been interested in Cooper's offers until May 1972 when Nicholson was in the middle of a takeover fight. H.K. Porter Company, a large firm with operations in electrical equipment, tools metals, and rubber products, also sought to acquire Nicholson. By 1967, H.K. Porter Company had purchased 44,000 of Nicholson's 584,000 shares of stock outstanding. In March 1972, Porter informed Nicholson's management of their plan to purchase a majority of Nicholson's stock, or 437,000 shares, at $42 per share. Cooper, upon hearing the news, offered to help Nicholson. Shortly after, Cooper withdrew their offer to help since the risks were too high that Porter would learn of their offer to help and would retaliate with an attack on Cooper.
By late March, Nicholson's management felt the increasing pressure to
MBAD 6235 Section 11
December 3, 2014
Elisabeth Goodson, Lynette Hammond, Wanting Hou, Sam Inman,
Qian Jin, Weisi Sun, Shumin Xu, and Yuru Zhang
I. Summary of the Problem
Cooper Industries was founded in 1919 as an equipment and heavy machinery manufacturer. Over time, Cooper Industries experienced significant growth through acquisitions. Nicholson File Company had been on Cooper's shopping list for years as a company to acquire.
What made Nicholson so attractive was its basic competitive strength. Cooper believe that acquiring Nicholson could reduce overcome its violent fluctuation of earnings. Nicholson had a 50% share for files and wraps with high quality line and strong name. Its hand saws and saw blades also had a very strong quality with 9% of the market. Cooper is also interested in Nicholson’s distribution system. Cooper believes that Nicholson will enjoy 6%-7% annual sales growth, cost of good sols reduced from 69% of sales to 65% and selling, general and administrative expenses form 22% of sales to 19%, which showed a great profitability.
Nicholson, a family-owned a managed hand-tool business, had not been interested in Cooper's offers until May 1972 when Nicholson was in the middle of a takeover fight. H.K. Porter Company, a large firm with operations in electrical equipment, tools metals, and rubber products, also sought to acquire Nicholson. By 1967, H.K. Porter Company had purchased 44,000 of Nicholson's 584,000 shares of stock outstanding. In March 1972, Porter informed Nicholson's management of their plan to purchase a majority of Nicholson's stock, or 437,000 shares, at $42 per share. Cooper, upon hearing the news, offered to help Nicholson. Shortly after, Cooper withdrew their offer to help since the risks were too high that Porter would learn of their offer to help and would retaliate with an attack on Cooper.
By late March, Nicholson's management felt the increasing pressure to