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Introduction
Lester Electronics (LEI) is a $500 million corporation that distributes electronic parts to original equipment manufacturers within the U.S. and Europe. LEI grew rapidly and added additional product lines that used capacitors in both consumer and industrial products. An exclusive distribution contract with a Korean capacitor manufacture, Shang-wa has been vital for its success. Through this strategic partnership, Lester Electronics holds a good portion of the market share in the United States. Recent events have pushed LEI to a pivotal point. Shang-wa has received a proposal to begin talking with Transnational Electronics Corporation (TEC) for a joint venture with the possibility of an acquisition. John Lin has hinted in the past about a partnership and now would like to make it a reality. Without a partnership to solidify both companies, they are both in a position to be acquisitioned into faster goring companies. LEI has also received notice that another company is interested in them, Avral Electronics (University of Phoenix, 2008).
The managers of LEI need to analyze their financial position and align their short-term goals with their long-term goals in order to create growth successfully for their company. Several options must be considered as this process evolves, LEI must define their intended growth strategies, evaluate the stakeholders, and look for opportunities to increase shareholders’ value in their company (Ross, Westerfield & Jaffe, 2005). Evaluating the merger with Shang-wa, Electronics (SE) must focus on due diligence and not only enable the merger to occur but to ensure the financial and corporate strength. A wrong decision can cripple both companies and decrease their ...