Monmouth Inc.

1. Yes I would try to gain control of Robertson in May 2003. The potential profits and synergies that would result from the merger between the two companies would most likely exceed the cost of the merger. First of all, the sales force in Monmouth’s Dessex-Kroll-Keane tools lines overlap with Robertson and this would provide a one of the avenues of lowering costs of operations. Similarly other areas where costs can be lowered to experience higher profits are the advertising ands sales expenses and the costs of good sold which have the potential of dropping from 69% to 65%. The two companies will also complement each other in terms of their sources of earnings where Robertson’s’ strength in the industrial market and its strong European distribution system would of great asset and would pull Monmouth’s products strengthening their presence in this market (Piper, 2010).

Accepting Simmons would though place Monmouth at a bad position and may find itself in Simmons position. The offer made by Simmons for at least a $50 per share price for their shares in order for them to support Monmouth is higher than required, and since Simmons is faced with bad investment prospects if NDP merges with Robertson, it would not be wise to take Simmons deal. Rather it would be wise to try and make a counter offer to Robertson management since prospects had changed since the last time Monmouth made an offer. Better projected prospects for the performance when Robertson merges with Monmouth may convince shareholders and similarly, Simmons would end choosing Monmouth rather than NDP to protect its shares values.

2. Maximum price they could expect to pay Monmouth based on analysis of valuation using discounted cash flow, calculation of WACC and terminal value determination

Discounted cash flow (DCF) works out the value of a company presently based on its future forecasted or projected cash flows. A company is worth the entire amount that it could provide investors in the future....