Sony-MGM MergerSony-MGM MergerSummarySummary

Reasons for increase in the stock Reasons for increase in the stock price of Sonyprice of Sony

Confidence among investors regarding the Confidence among investors regarding the profitability of the merger.profitability of the merger.Great amount of interest shown by the Great amount of interest shown by the business partners of Sony such as Texas business partners of Sony such as Texas Pacific Group, Providence Capital Inc. and Pacific Group, Providence Capital Inc. and others, in financing this deal.others, in financing this deal.Established and reputed brand name having Established and reputed brand name having a trust of a large no. of customers.a trust of a large no. of customers.

Reasons for decline in the stock-Reasons for decline in the stock-price of MGMprice of MGM

Borrowing of a large amount for paying the Borrowing of a large amount for paying the dividend of $8 per share.dividend of $8 per share.

Open declaration of the intention to get Open declaration of the intention to get acquired by an organization.acquired by an organization.

Not enjoying the confidence of the Not enjoying the confidence of the shareholders after the announcement of its shareholders after the announcement of its merger prospects with Sony.merger prospects with Sony.

Potential impact on the combined capital Potential impact on the combined capital of the merged entityof the merged entity

Tremendous increment in the combined capital Tremendous increment in the combined capital of the merged entity.of the merged entity.

Increase in the scope of the business and Increase in the scope of the business and sustained long-term profitability.sustained long-term profitability.

Large market share, enhanced debt capacity Large market share, enhanced debt capacity and lowered financial costs.and lowered financial costs.

Enhanced power against buyers as well as the Enhanced power against buyers as well as the suppliers.suppliers.

ReferencesReferences

Pandey, I.M. (2007). Pandey, I.M. (2007). Financial Management, Financial Management, 8th 8th EditionEdition. . Delhi: Vikas Publishing House.Delhi: Vikas Publishing House.

Horne, J.C. (2008). Horne, J.C. (2008). Fundamentals of Financial Fundamentals of Financial ManagementManagement, 10th Edition. Delhi: Pearson , 10th Edition. Delhi: Pearson Education Limited.Education Limited.

Wall Street skeptical of Sony as Lion tamer. (2008). Wall Street skeptical of Sony as Lion tamer. (2008). Retrieved March 29, 2008, from Retrieved March 29, 2008, from http://www.variety.com/article/VR1117903697.hthttp://www.variety.com/article/VR1117903697.html?categoryid=18&cs=1.ml?categoryid=18&cs=1.

ContinuedContinued…..…..

One day left on Sony-MGM talk pact. (2005). One day left on Sony-MGM talk pact. (2005). Retrieved March 29, 2008, fromRetrieved March 29, 2008, from

http:// www.marketwatch.com/news/story/one-http:// www.marketwatch.com/news/story/one-day-left-mgm-sonyexclusivity/story.aspx?day-left-mgm-sonyexclusivity/story.aspx?