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Gap Analysis: Lester Electronics
Lester Electronics, Inc (LEI) is a public traded electronic parts distributor to the consumer and industrial small and medium sized original equipment manufacturers, repair facilities and small local distributors throughout Americas and Europe. LEI grew rapidly and added additional product line that use capacitors in both consumer and industrial products. Operating in this way, LEI expected to earn $500 million annually. LEI considers corporate growth that result from mergers to increase long-term profitability (Scenario, UOP). Acquisitions by merger and consolidation result in combinations of the assets and liabilities of LEI and Shang-Wa Electronics.
Situation Analysis
LEI is faced with the decision to align with Shang-Wa Electronics, its primary supplier of capacitors for the U.S market to establish a new business capacitor manufacturing facility that acquire Shang-Wa outright or sell the firm to Avral Electronics. Through recent mergers and acquisitions, the company has finally developed enough resources to expand globally. Merger provides an opportunity to bring together and increase the value of the combined enterprise (Scenario, UOP). In fact, the firm must study the best options and make a decision timely in order to maximize shareholder wealth.
Issues and Opportunities Identification
Shang-Wa CEO John Lin began manufacturing capacitors in 1969 and entered into an Exclusive Supply Agreement with Bernard Lester, LEI in 1978. Shang-Wa granted Lester the exclusive right to sell Shang-Wa capacitors in the United States for 65 years and they have very strong relationship over t ...