California companies that are looking to acquire or merge with other businesses need to take the due diligence process seriously. Ideally, they will spend a lot of time listening and learning as much as possible about an acquisition target. Taking this step makes it possible to learn more about whether a business is worth taking over or if there is too much overlap between the two entities.
Companies doing business in California or any other state may feel that a merger is in their best interests. In a vertical merger, a supplier will merge with one of the businesses that it supplies products to. A horizontal merger involves competing companies in the same field coming together to create a larger and potentially stronger entity. In some cases, a horizontal merger is hostile in nature, which means that one organization forcefully takes over the other.
Two companies are publicly sparring over a merger that could affect rent-to-own consumers in California and across the country. Rent-A-Center, which specializes in rent-to-own sales of household goods and products like electronics and furniture, said that it terminated its agreement to merge with Vintage Capital Management, a private equity firm that also owns one of its major competitors in the market. Earlier, the merger had been approved by a decisive vote of Rent-A-Center shareholders in September 2018.
While some people in California might not be familiar with the food delivery services Waitr or Bite Squad, that could change in the years ahead since Waitr is purchasing Bite Squad. The deal means expansion to 500 cities in more than 20 states. Bite Squad will continue using the same system for now, so existing customers are unlikely to see any immediate changes.
Since the legalization of recreational cannabis in California, edible products infused with cannabis have become more popular with consumers. Retail figures from the third quarter of 2018 ranked Plus Products Inc. as the producer of the best-selling edibles brand in the state. To build upon this success, Plus acquired GOOD CO-OP, another producer of baked cannabis foods.
Soft drink and snack food giant PepsiCo, Inc. has finalized its purchase of SodaStream International, Inc. in a deal with a value of around $3.2 billion. People in California who drink soda might already have SodaStream machines in their homes as the company touts its environmental friendliness and lack of plastic bottles. PepsiCo paid a 32 percent premium over the 30-day volume weighted average value to buy all of the outstanding SodaStream shares at a price of $144 each.
Investors in California and around the country may be aware that CVS Health Corp. is planning to acquire Aetna Inc. in a deal said to be worth almost $70 billion. Regulatory approval for the mammoth acquisition seemed assured when the Department of Justice granted its approval in October providing that Aetna's Medicare drug division be sold off to preserve competition in the sector, but shareholders hoping for a smooth process followed by a speedy conclusion were dealt a blow by a federal judge on Dec. 2.
Open-source software development site GitHub is now being acquired by one of the largest giants in corporate software, Microsoft. Earlier in the year, Microsoft announced its $7.5 billion acquisition of the site, which offers a space for coders and software developers to provide and collectively improve code for a range of programs. As of Oct. 26, Microsoft announced that the acquisition had been completed, but that GitHub will continue to be run as an independent business with its existing platform, community and philosophy.
With the acquisition of Red Hat, IBM could expand its business in the cloud computing sector in California and globally. Red Hat brings a chance for the legacy technology company to gain market share against competitors like Amazon and Alphabet that are leading players in the cloud market.
One of the most important factors in getting value from mergers and acquisitions in California is integrating the companies to keep trading with existing partners smooth and to promote organizational efficiencies. The mergers and acquisitions process can be roughly broken down into four steps. They are conducting due diligence, coming to agreement, integrating the companies and attaining value.