Case
George Mason University Mercury Athletic Footwear: Valuing the Opportunity
- Course
- Institution
Mercury Athletic Footwear: Valuing the Opportunity case study for MBA 643!
[Show more]
Seller
Follow
lifetrixmuna
Content preview
Mercury Athletic Footwear: Valuing the OpportunityCourse: MBA 643
Executive summary
, In this paper I sought to determine whether Mercury would be a viable acquisition for AGI. AGI
has a niche in casual wear while Mercury specializes in athletic wear. Both companies belong to
the apparel industry and have comparable revenues and identical business processes as well. An
acquisition of Mercury by AGI would enable AGI to diversify their footwear products and as a
result boost their revenues as they tap into the new markets originally owned by Mercury.
Additionally, an acquisition of Mercury would augment AGI’s market share in manufacturing
leverage. To determine the enterprise value, I worked out Mercury’s free cash flows for the next
five years using the discounted cash flow approach by basing on Liedtke’s projections given in
exhibit 6. I obtained the enterprise value to be $367,850 and recommended that AGI go ahead
and acquire Mercury at the enterprise price.
Assumptions were used to identify the risk free rate to be used in calculating the cost of equity
under the CAPM model, I based my rate on a U.S treasury bill with 5 year maturity.
Yeah, Mercury is an appropriate target for AGI. AGI has a niche in in classic casual footwear
that is aimed at affluent urban and suburban family members aged 25 to 45. Mercury on the other
hand has a niche in men's athletic footwear that is mainly aimed at youths aged 15 to 25 years.
Therefore by merging efforts, AGI would be able to capture a new market base that they hadn’t
tapped into yet which would significantly boost their sales. Additionally, AGI is much smaller
than its competitors and is at a disadvantage when it comes to securing Chinese manufacturers
who favor larger companies that guarantee them longer production runs. As a result, AGI has
been under continuing pressure from suppliers and competitors due to its small nature. However,
with the acquisition of Mercury- an already big company in terms of operations and revenues
AGI would augment its leverage to the suppliers and obtain an upper hand against its
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller lifetrixmuna. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $10.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
75632 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now