M&A and its effects on Management Part 2

In part 2 of the interesting relationship between the manager's of a firm and their engagement in Merger's and Acquisition's, I look at one of the top possible deals in the pipeline. The large health-care firm Johnson & Johnson looking to buy a Dutch Biotechnology firm called Crucell.

In the first part I looked from the perspective of the buyer, who incurred a sunk cost in the months of attempting to make a deal and had enough cash on hand to try other deals, while here I will look at the management versus investor perspective at Crucell.

J & J already own about 20% of the Dutch firm and are looking to tender an offer for the rest of it.

The bid of 1.75 Billion Euros by the company is seen by management as increasing their ability to produce and sell the products they are working on in the future. The team believes they will become a unit of the much larger firm if they are bought out, allowing them to continue their research until it reaches fruition and provides a large amount of revenue.

The second largest shareholder, Van Oerk Group, with 10%; as well as others, believe the bid is too low. The bid is at a slight premium to the price as it is currently, but the company hasn't dropped their bid even while Crucell is struggling to pay for their South Korean facility's problems, causing much discontent among investors. Also, investors in Biotechnology firms such as Crucell know that their innovations will eventually lead to the "next big thing" and provide a substantial pay-day if they wait a few years.


The CEO has urged the investors to take the offer. Leading to the question; does the CEO think that J & J is saving Crucell from a severely depressed stock price or that they will really help Crucell reach its Crescendo. Let's see how this all plays out in the months and years to come.


And that is my final blog post for Management 3120 in Fall 2010, it's been a great ride, thanks Professor!