• An Analysis of M&A Decision of Distributor －A Case Study of Wenhsiung Optical

Abstract

At the end of 2002, due to a breakthrough in contact lenses technology, the sales of contact lenses were expected to increase significantly. Recognizing the changes, many large manufacturers, hospitals and distributors started international upstream and downstream integration, hoping to achieve synergy through M&A. Amid the M&A wave, Wenhsiung Optical received an M&A proposal from Formosa Optical. This article analyzes the M&A decision making and price calculation through a case study.

The article describes the background and the process of the M&A of Formosa Optical and Wenhsiung Optical. The teaching note uses strategic management and business evaluation theories to help students understand the considerations in M&A decision-making, the fair presentation of corporate values, and the calculation of M&A prices.

This case study will help students understand the relationship between M&A and synergies, as well as corporate value assessment methods and M&A prices calculation. The research also sheds insight on management practices. These are the main contributions of this research.

Keywords: Strategy, Synergy, M&A, Information Asymmetry, Business Valuation