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Proposed Acquisition of Southern Comfort

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1.Executive Summary The case study has been approached from different valuation methods to ascertain if there is value in the acquisition of Southern Comfort. These methods all yield the same result, i.e. Southern Comfort is expensive at the asking price of $94.6million. The valuation methods also examined the reasonableness of the acquisition using methods such as Free Cashflow Analysis, Book Value methods and Price Earnings ratios analysis The qualitative aspects have also been analysed to find out if there is value from a qualitative perspective. Methods such as SWOT analysis have been utilized to check if there would be a ‘perfect fit’. A perfect fit is basically an analysis that the acquisition will bring synergy between the two …show more content…

The acquisition of SC has also the potential to add on unique liquor which is mixed by a secret formula and has exclusive rights which (see Appendix?) have a huge synergic benefit to the present BF product mix-line offerings and brand equity. Besides, SC has strengthened channels of foreign distribution and tremendous brand growth in 1977 compared with competitor brands in the same product line. Because SC is not aggressively marketed and that it is wrongly positioned market, because they think it is a whiskey. If acquired, SC could bring in the foreign penetration capabilities and know-how to BF. If aggressively marketed and repositioned SC could add a lot of vale to BF too. SC also has a well reputable brand offering and the management is well run and efficient, equal to that of BF thus the acquisition of SC would fit well in BF style of management philosophy. SC also has modern equipment which is an asset that could strengthen the asset base of BF and could be used in the continued production of SC without replenishing the asset in the foreseeable future and/or tries to adopt the production of SC to BF product line systems and standards. Thus the operational strategic competitive position of BF could be enhanced. That could also improve agility or obtain resources that are vital to future prosperity of the SC in particular and BF in general. The two firms resemble each other in

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