MICROECONOMIC REPORT
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Contents
Google Acquisition Strategy. 3
Impact of Acquisition on Google Inc. 4
Impact of Acquisition on Specific Industries. 4
Company Performance and the Public Interest 5
Jazz Pharmaceuticals Acquisition Strategy. 5
Impact of Growth Strategy on Jazz Pharmaceuticals. 5
Impact of Acquisition on Specific Industries. 6
Company Performance and the Public Interest 6
CapLease Merger with ARCP (ARCT IV, 2013) 7
Impact of Acquisition on Specific Industries. 7
Company Performance and the Public Interest 8
Microeconomic Report
The first article discusses the methods and processes through which Google Inc. conducted their acquisition of QuickOffice in 2012. The article discussed the decisions made in selecting QuickOffice as the application that would drive up the competition in the mobile sector. The text also covered the analysis of the effect of the acquisition on the customers’ loyalty and purchasing trends.
The second article discusses the fast growth of Jazz Pharmaceuticals from a small pharmacy into a registered public company over a short period. Furthermore, the article covered the different strategies and tools used to propel Jazz into the limelight as a promising and prosperous company in 2012 (David 2011).
The last article discusses the successful merger that took place between CapLease and American Realty Capital Properties in 2013. In November 2013, CapLease announced the finalization of its merger with American Realty Capital Properties (ARCP). As a company dealing with real estate investment, CapLease has had a shortlived problem with maintaining its diversified portfolio of commercial housing units. Previously, ARCP had shown interest in the merger, and the notification that 99% of the shareholders had voted in favor of the amalgamation was good news (ARCT IV 2013). The merger of these two companies resulted in increased profits and a larger customer base due to the combination of workforce, resources and approaches.
Google Acquisition of QuickOffice
Beforehand, there were no official Microsoft Office applications and QuickOffice was a leader in word processing and other related services. On June 5, 2012, Google completed the acquisition of QuickOffice. While Google had developed their own product, Google Docs, it had few features forcing the company to acquire QuickOffice and integrate the features into its own system.
Impact of Acquisition on Google Inc
Since its acquisition in 2012, Google has constantly been expanding the productivity and availability to a level that schools and businesses use QuickOffice for different formats. While the exact details of the acquisition were not disclosed, it was clear that Google had offered a massive amount of money to purchase the company before any of its competitors had the opportunity to do so (David 2011). The acquisition of QuickOffice provided Google with seamless interoperability with common file formats. However, the company sought to work on converting the application into a web-based platform. QuickOffice has managed to amass and attain a strong customer base, and Google depended on this strong reputation to sustain them while developing a flawless, creative, and incorporated experience.
Impact of Acquisition on Specific Industries
Even though Google is a leader in the online advertising market, it has been attempting to survey the mobile environment and fight with Microsoft and other companies by offering its own collection of Office applications that are available on the Internet. A small number of applications like Google Docs are provided free online while superior versions categorized as Google Apps are sold in software markets. By introducing QuickOffice into their software pool, Google would be able to compete with Microsoft in the mobile arena. The results of this acquisition are visible as Google realized a successful first quarter reaching up to $10.65 billion (David 2011). With the purchase of QuickOffice, Google intensified its pressure and reinforced its position as an application developer after Apple and Microsoft. Within the same year, over 300 million Google customers had installed the application on their devices (David 2011).
Company Performance and the Public Interest
Within the mobile application environment, Apple, Microsoft and Google stand out as the major developers and rivals. The acquisition of QuickOffice tilted the balance in favor of Google as the application provided a large variety of common functions including word processing, PowerPoint capability and other features. QuickOffice also had the ability to backup data on cloud storages and work on various devices and operating systems.
Aggressive Growth of Jazz Pharmaceuticals
Jazz Pharmaceuticals Acquisition Strategy
In the year 2013, Jazz Pharmaceuticals was cited as one of the fastest growing companies that have been registered on NASDAQ. The company became known as an emerging powerhouse after its announcement to acquire Gentium SPA at a steep price. The acquisition of Gentium provided the company with an opportunity to grow and prosper in the medical field. In the healthcare sector, the difference in prices for medical products and services is an important factor for the customers. Furthermore, Jazz Pharmaceuticals has the objective of acquiring different companies and realigning them to suit a common goal of providing affordable and first-class products.
Impact of Growth Strategy on Jazz Pharmaceuticals
As of 2009, Jazz Pharmaceuticals was only worth $34 million, but since that year, the stock has grown by approximately 12,000% (Ernest & Young 2013). In comparison to other rival companies such as Priceline and Regeneron Pharmaceuticals, Jazz Pharmaceuticals has performed seven times better. Jazz has developed from a humble growing company to a midcap prosperous profitable business. Currently, Jazz Pharmaceuticals has close to ten products on the market for conditions ranging from OCD, pain, schizophrenia, narcolepsy, and cancer. The aggressive growth acted as a clear sign that Jazz Pharmaceuticals was making in-roads into the health sector. Specifically, the growth spurt would mean an increased number of clients migrating from other providers.
Impact of Acquisition on Specific Industries
The miscellany and performance in the stock exchange are two major reasons that most people have invested in Jazz Pharmaceuticals. In their last quarter of 2013, Jazz recorded revenues of approximately $208 million that reflected a 67% growth annually. This growth and massive revenue was attributed to its two major drugs: Erwinaze and Xyrem. The sales of these two drugs accounts for approximately 85% of the total company turnover (Ernest & Young 2013). There are several reasons behind the growth of Jazz Pharmaceuticals.
Company Performance and the Public Interest
The share price of the company is still quite affordable for most of the average earners and it has little indication of being taken over anytime soon. Jazz handles biotechnological products that are highly profitable and have a permanent clientele. However, Jazz Pharmaceuticals is also in a position where it can be acquired by other companies making it highly valuable. The company has had a short history in operation, and most analyses have been unable to use financial tools to make a solid prediction (Mandel, Michael & Carew 2011).
The immediate result of the merger was evident in the dividends allocated by ARCP that rose from $0.03 for every share to $0.91. This was a good decision that augured well with the shareholders who saw potential form higher profits in the company.
Owing to the merger, ARCP added to its portfolio approximately 70 offices, retail and distribution properties roughly 10 million square feet that translated into greater levels and diversification for the company. On their part, CapLease was interested in the merger as it provided an opportunity for it to emerge as a formidable force in the REIT industry. The overall effect of the merger was mostly felt by CapLease that realized an increase in their enterprise value from approximately $200 million in 2011 to $10 billion by 2013. In essence, the mergers, several acquisitions and portfolio purchases transformed ARCP into the second largest net lease real estate investment trust company (Rottig 2007).
Impact of Acquisition on Specific Industries
With the merger completed, ARCP continued to diversify their assets and client base and augment the estimated 2014 financial targets that were formerly announced. The merger acted yet another case of acting upon the intentional and aligned strategy to, enlarge the size of the firm in an industry where company scale is significant, enhance profitability, augment asset and client diversification and in the process, lower the risk. ARCP concentrated on developing a portfolio of assets that generated substantial income and possible net appreciation, whilst maintaining capital investment and offering a degree of inflation and interest rate hedging.
Company Performance and the Public Interest
The merger gave ARCP the scale and size that permitted the company to become self-sufficient by the end of 2013, further lowering the operational costs and possibly improving the AFFO standings (Rottig 2007). ARCP has continued to be dedicated to the purposeful and constant implementation of their investment strategy that included finalizing the merger with CapLease and the premeditated $1 billion portfolio acquisition that was scheduled to take place in 2013. Besides these announced business deals, the inclusion of ARCT IV property to ARCP’s collection also brought with it more office space in local and overseas locations. However, the most significant addition in the merger was the ARCT IV stockholders that were automatically converted to ARCP ones with the promise that their investments would be in the hands of a growing and diversified company (ARCT IV 2013).
The strategy adopted by an organization for different functions determines the extent of success of that company. In the above analysis, several observations are evident. In the Google article, the acquisition strategy sought to buy off any smaller competition in the environment and the process, acquire their business culture, clientele and systems. Google’s strategy is useful in growing an already established company without much research and development, as well as input from the staff. The growth strategy adopted by Jazz Pharmaceuticals was a combination of several approaches including maintaining affordable stock prices, pursuing an aggressive marketing strategy and investing in research and development.
ARCP and CapLease made use of a basic strategy that involved combining forces to survive the competition within the real estate sector. Through the merger, a new company emerged that displayed the best of both mother companies. The approach used by both companies in the merger was essential on several levels. One, it allowed both companies to survive by combining their assets, personnel and networks. Furthermore, the merger brought together two firms into a pool of ideas that created more revenue and loyalty with the stakeholders and clients alike. Lastly, taking part in the merger enabled CapLease to emerge as a dominant player in the real estate sector.
ARCT IV, 2013, ARCP and Cole Merger to Create World’s Largest Net Lease REIT.
David, J, M, 2011, The Aggregate Implications of Mergers and Acquisitions, University of California, pp. 12- 44.
Ernest & Young, 2013, Closing the gap? Big pharma’s growth challenge and implications for deals, Ernst & Young Global Life Sciences Center, vol. 2, pp. 91-101.
Mandel, Michael & Carew, D, G, 2011, Innovation by Acquisition: New Dynamics of High-Tech Competition, Progressive Policy Institute. vol. 1, 1, pp. 7-12.
Rottig, Daniel, 2007, Successfully Managing International Mergers and Acquisitions: A Descriptive Framework. International Business: Research Teaching and Practice. vol. 1, 1, pp. 14-22.