Mercury Athletic Essay

1785 Words8 Pages
Introductory Statement Active Gear Incorporated is faced with an opportunity to acquire Mercury Athletic Footwear, which is a division of West Coast Fashions (WCF). AG must decide whether this is feasible based on its projected value and possible mutual opportunities. Problem Statement In anticipation of being approached about a possible acquisition, John Liedtke, the head of business development for Active Gear Inc., would like to proactively evaluate this new business potential. Mr. Liedtke would need to look at the historical pro- forma’s provided to project future operating income. A more detailed look at each of Mercury’s four footwear segments, their operating income and revenue would also help to determine possible and plausible collaborations between the two companies going forward. In order to make an informed decision Mr. Liedtke would need to determine an adequate price for the purchase of Mercury Athletic Footwear. Analysis The result of West Coast Fashions reorganization led to the decision of divesting any inferior assets and placing their focus on areas of the business that were most profitable. This meant they would look at eliminating their footwear division (Mercury Athletic). At first glance it appeared that the acquisition of Mercury would be a good business decision for Active Gear. This acquisition could potentially double AG’s revenue, give them greater leverage with manufacturers and allow them to expand by increasing outlets with retailers and distributors. The footwear industry is slow growing but proves to be a stable and profitable market. The stability is affected more by competitors and being first out with the “newest” fashion trend. This also varies when looking at the athletic versus the casual shoe lines. In the athletic segment competition is based on quality, style and price whereas the casual shoe line is based
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