Taking Over a Private Retail Company in Argentina
Eduardo Mariscotti, In-House Counsel, Walmart, Argentina
The first thing to ask. What is the rationale for an acquisition?
Mergers and acquisitions are considered by bidders to achieve strategic goals like the expansion of assets, sales and market share, the creation of more competitive advantage and at the end to maximize the wealth of shareholders.
In a merger, the companies come together to combine their resources to achieve common goals. In an acquisition (takeover) one firm purchases the assets and shares of another.
Those M&A that will provide to the retail company big savings and synergies and low integration risks should be the target; they should build scale to leverage the Home Office and the Distribution Center expenses.
On the other side, those M&A that will provide low savings and synergies and high risks of integration should be re considered.
Evaluating an acquisition of a retail company is a complex multidisciplinary exercise that requires specialists from different areas.
Since the acquisition requires a due diligence audit previous to the transfer of ownership of shares or assets and the transaction may be subject to antitrust rules, the contracts should be drawn up by expert lawyers.
One of the first tasks is to locate a potential target in terms of industry, level of competition and geographical presence.
The next step is to analyze the Company’s competitive strengths and weaknesses.
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