Financial strategy Course -case on Mergers & Acquisitions

The kind of acquisition opted for Capita plc is reverse merger which will provide the benefits of public company thus acquired by it. The expectation of Capita related to the increase in the revenue of Capita plc has well been met. The valuation of iSoft at the point of dealing was AUD 28.5 million from the proceeds of the sale of assets. These earnings of the company were mainly to repay the financial dues of the company. As iSoft Business solutions was considered a non-core part of the iSoft group, so the company took the decision to sell it off as thing wing of the company was yielding negative returns. Moreover, further investment in this particular wing of the company may not have been useful. Thus the decision of selling off the company was taken by the management of the company. However, the major success that Capita plc obtained by acquiring iSoft Business solutions was unthinkable. This led to the company to further acquisition of companies expanding its market in varied fields. Thus from the study it can be inferred that acquisition is a better option than a merger.

Probable decline in the revenue and the rise in the cost of iSoft Business solutions led to the acquisition of the company by Capita plc. Appreciation of the Australian dollar against the Euro was one of the main reasons behind the decline in earnings of iSoft Business solutions. This eroded the revenue of the company by $108 million in comparison to the previous year. In fiscal year 2010, over 70% of the revenues of iSoft’s revenue were denominated in GBP and Euro. Even the other regions in which iSoft Business solutions operated had more or less flat revenue. Thus the company anticipated a large portion of cost towards the revival of the company but the growth in revenues did not materialize.

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