Cooper Industries

GROUP No-3
Vikas Saraswat 27nmp34
Rahul Tiwari 27nmp64
Komal Tagra 27nmp51
Mona Priya 27nmp20
Parvathi VS 27nmp61

About Cooper Industries

Cooper Industries- founded in 1833 by brothers Charles and Elias Cooper

The company started as a foundry and was initially called the C&E Cooper
Company.

Coopers initial product offerings included plows, hog, troughs, kettles and
stoves

In Mid 1950s, Cooper Industries became the national leader in pipeline

compression engines, products that enabled the development of the
growing oil and gas industry

Since it wanted to reduce its exposure to more cyclical industries such as

automotive and petroleum, Cooper underwent a period of portfolio
rationalization starting in1959.

This was mainly accomplished with it relying heavily on Mergers &

Acquisition

Rule of Acquisition in this case:

Under Rhode Island Law Company must own majority shares (50.1%) to merge the
target company

Cooper Acquisition Strategy

Coopers requirements to acquire a company have three major components. The
target company must be:
In an industry in which Cooper could become a major player.
In an industry that is fairly stable, with a broad market for the products having
large customer base.
A leader in its market segment.

Leading manufacturer of File & Rasps

Reason For Targeting Nicholson File Company -1971

Having 50% market share of 50 million$ market for file & rasps

Enjoying 18 million$ market share in Saw Blades

Having a distribution network of 53000 retail outlet through

2100 hardware wholesalers.

Presence in 137 countries World-Wide.

Facts about the Nicholson File Company:

The Nicholson family and other members of the management group own about
20% of the Nicholson stock; the remainder is publicly held.

Vulnerability to be acquired

Annual Sales Growth of 2% below industry growth rate of 6%

poor bottom lines compare to other hand tool manufacturer

Poor Market Sentiments on stock reflected in its poor P/E Ratio.

Valuation of Stock more on the basis of dividend yield rather than hope for
capital appreciation

Net Worth of the company is presumed on the basis of Book Value (1971) which
is 51.25$ Per Share

Synergy Between Cooper & Nicholson :

Cost Of Good Sold reduction from 69% to 65% of sales Leading to additional
Income of 2.20 Million $

Selling, General & Administrative Expenses reduction from 22% To 19%

Calculations-Nicholson share value

post merger with Cooper

Nicholson-Cooper Deal
With the stock price of nicholson ranging from
73-89 in 1972 to 96-116 in 1976, its good
opportunity for cooper to make a move for
control.
Even after Porter seeking $50 per share price
on nicholson stock its a healthy proposition
for cooper industries to go after Nicholson
acquisition.