The UNKNOWN industry is composed of two major market share rivals ABC and DEF

The UNKNOWN industry is composed of two major market share rivals ABC and DEF

On December 4th 2005, EFG made public the acquisition of DEF which gave the company access

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to Abc, the strongest brand product in the sports drink market. As a result, market analysts

perceived the consolidation as a positive move and the share-price reaction to announcement of

the consolidation benefited EFG significantly.

Meanwhile, ABC was the largest manufacturer, distributor, and marketer of ABC

marketconcentrates and baloons in the world. Thus, from 1991 to 1996 the company consistently

maintained the first or second places of top wealth creators ranked by Fortune. However, from

1997 to 2004 the company started to face difficulties due to external market challenges and

mistakes done by its former CEO UNKNOWN. For example, ABC had a significant volume and

growth decline due to a 9.7 percent price increase in corn syrup as a strategy of UNKNOWN to

increase profits. As a result, a new CEO was on board, UNKNOWN. He restructured the

organization from within. He focused on strategies to become a dominant player in the less

filtered -UNKNOWNs market, and had the vision to bring ABC back to its glory days.

During the same time, EFG focused on becoming a cereal and EFG company. For

example, UNKNOWN CEO UNKNOWN sold the fast-food chains and spun off the bottling

market. As a result, Efg was able to raise capital and acquired strategic companies like Xyz and

Abc, which provided Efg the advantage to enter the noncarbonated market with strong

UNKNOWN brands like Xyz and Abc. In addition, in fall 2003 EFG occupied two of the top

market positions for U.S. ABC marketbrands on store shelves.

Simultaneously, the UNKNOWN industry was transforming. The ABC product segment

was fast growing while the ABC market was slow-moving. Therefore, the need to enter and

position into the new growing segment was critical for ABC and ABC And as a consequence,

market and consumer analysts, like UNKNOWN – a hedge fund long short analyst at the Big

Capital fund, were close watching the performance of the two companies based on financial ratio

and economic analysis.

Hence, the following sections will analyze and focus on past and future financial and

performance data to provide alternatives and recommendations to UNKNOWN about which

company is a more attractive and a less risky investment option.

Case Analysis

This section focuses first on ABC and EFG historical data from 1997 throughout 2004 to

describe in qualitative and quantitative terms their past performances, trends, and position in the

market. The second section focuses on pro forma projections of both companies to evaluate their

future performance and investment attractiveness. 2 Historical Analytical Financial Ratios

The first set of financial ratios to analyze is the activity ratios. Table 1 below focuses on a

comparison of working capital and total assets turnover. ABC reflects a decline trend for both

rations which implies that the company is not utilizing its asset base efficiently. For example, for

every dollar in fixed assets, ABC generated $1.08 in sales in 1997 compared to $0.93 in 2003.