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Rayovac Corporation: International Growth and Diversification through Acquisition Case Solution & Answer

Rayovac Corporation: International Growth and Diversification through Acquisition Case Solution

Moreover, with the help of financial analysis of the company, it can be seen that the company has slightly increased its profitability over the period through the synergic effects with which the company achieve significant cost reduction. The last factor the significant increment in the market price of the company stock that can be seen from the stock chart provided in the case. It can be seen that the company is assuming that with the little experience in the different market, it could gain significant positive results. However, managing the diversified business in the presence of varying economic conditions and foreign exchange issues is not an easy task to be done. It can be seen that the company, from the year 1996 to the year 2005, has enhanced its overall capabilities by adding various other distribution channels and improved its existing purchase and supply chains around the world and lastly, there has been strong technological development.

  1. Referencing the case, and Exhibit 1, page 11, summarize (one point)why Rayovac acquired:
  • Remington
  • United Industries
  • Tetra

The reasons of the above acquisitions are summarized below:

  • Remington: The major reason of acquiring Remington by Rayovac is due to the diversification strategy adopted by the company in order to diversify its core battery business. For the very first time, the company with the help of Remington started selling personal care products for which Remington Products has gained a significant name. The acquiring company with the help of number of similarities could enhance its sales revenues through cross-selling of their products.
  • United Industries: The company in order to further enhance its market share once again went into diversification of products by adding lawn and garden care products and increased its sales revenues in the United States region thatcould be done with significant cost reduction program which could be achieved because of the already present distribution centers.
  • Tetra: The reason of acquiring Tetra Company is to further improve the previously acquired company in order to achieve significant leading position. It can be seen that Tetra has increased the market share of pet supplies in the industry and its acquisition could help the company in achieving the desired position in the industry and just because of these two acquisitions, the company would beable to diversify its core business products into new ones.
  1. Exhibit 1, page 11, Calculate the multiple of price paid over EBITDA for each acquisition.

Price Paid

EBITDA

Your conclusion?

There are numerous acquisitions made by the current company in an effort to achieve global growth using the diversification strategy. The multiples for different acquisitions are summarized below and are also given in the below exhibit.

  • The first and the foremost acquisition from the overall history of the company is ROV Limited which wasacquired in the year 1999 with the multiple of 3.78.
  • Secondly, the company acquired Varta Limited on October 2002 with the multiple of 6.26.
  • Next, the company acquired Remington Products on September 2003 with the multiple of 6.60.
  • In order to acquire 85% stake, the company acquired Ningbo Baowang, a Chinese-based company with the price over EBITDA multiple of 9.12.
  • InJune 2004, the company acquired Microlite Brazil with the negative multiple of -5.94.
  • The company acquired United Industries on January 2005 with the price multiple of 10.03.
  • Lastly, the company acquired Tetra Holding on April 2005 with the price multiple of 10.49……………….
  • This is just a sample partial work. Please place the order on the website to get your own originally done case solution
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