Analysis of the purchase of AGOC

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According to the financial statements provided,AGCO gets presented as a very prominent company that deals inagri-business. Although some other three companies within the regionindulge in the production of the same products, AGCO tends to pose agreat deal of stiff competition. The Deere &amp Co. is a companythat deals with the manufacture of tractors and due to the stiffcompetition that it faces from AGCO and other companies, it tends tothink of strategies on how to curb the competition. After a while, itdecides to purchase AGCO which is a well-natured company.

It is possible for Deere &amp Co to purchasesAGCO this is because it netted an income of 37.8 billion dollars ina three-year action plan. It gave it the potential to reach at thetop of its potential by buying AGCO and in the process, stiffcompletion might get eliminated thus making the company earn profits.The purchase of AGCO by Deere might see it move to the next levelwhere the remaining companies might not get the opportunity tosupersede its dealings (Pritchett &amp Clarkson,2007).

According to the SWOT analysis of Deere &ampCo.The strengths are more prominent than the weaknesses, the same caseapplies to that of the AGCO Company and through any merging betweenthese two companies, and it might create a superpower company with agreater market pool than the remaining company. Also, the number ofcustomers they serve might escalate due to issues like consumerloyalty, consumer satisfaction and production of quality productsmight attract more customers thus boosting the profit margins of themerged companies( Pride &amp Kapoor, 2010).

Looking at the financial dealings of the Deere &ampCompany as of the fiscal year 2011-2013, its net income kept onincreasing over the years, and this suggests that the company is onthe verge of becoming a great company with capabilities of purchasingeven a larger company.

Company name

2011

2012

2013

AGCO

3,031.2

3,481.5

4,044.8

Deere &amp Co

48,207,400

56,265,800

59,521,300

CNH industrial

$ 5,252

5,376

5,556

The above table shows the total assists for eachof the businesses and the Deere &amp Co. Seem to have the leadingnumber of assets than all other companies this suggests that whenits assets get converted regarding cash, they tend to portray alarger amount of than those of other businesses. Any mergers betweenthe Deere &amp Co. might lead to a financial booming regardingprofits, this is because when their assets get combined, they mightform a part of a colossal business and, in turn, lead to increasedproductions since the two companies deal with the manufacture ofalmost the same products. Not forgetting the market pool theirmerging might create, in the sense that, the AGCO Company might drawits loyal customers towards the merged company, and this mightescalate the profits. The purchase of AGCO by Deere &amp Co mightmean that the market demands for their goods and services mightincrease because the merging of the two companies might promote thegrowth in consumer loyalty and satisfaction ( Gaughan, 2011).

For instance, with the purchase of AGCO, let ustake a case where in the fiscal year of 2013.The total assets forDeere were at 59,521,300 and those of AGCO were at 4,044.8 regardingmillion dollars, this might increase their total assets to59,525,344.8 million dollars, and this might promote or boost theproduction of the two companies leading to increased profits.

Other companies that offer competition to DeereCompany that should get mentioned are the CNH industrial and the AGCOCooperation. The analysis of the CHN industrial shows that it isfinancially healthy to offer stiff competition to other players inthe sector. The trading profit of the company in the financial yearending 2013 was 1985. On the other hand, the AGCO Company has thegross profit of 2390 million Euros. The total equity for the yearended 2013 was 4044.8 million Euros. The Caterpillar Company isanother competitor in the market. It offers potent competition sinceit is a favorable financial position with total assets and the netprofit of 84,896 and 3789 million Euros.

In conclusion, the cost analysis of the Deerecompany purchasing power can get analyzed by scrutinizing thefinancial positions of the company. The company’s assets by thefiscal year ending 2013 were 59,521,300 against the total liabilitiesof 49,255,500 million Euros. The amount of such financial musclemakes it able to purchase the AGCO Company.

References

Gaughan, P. A. (2011). Mergers, acquisitions, and corporaterestructurings. Hoboken, N.J: Wiley.

Pritchett, P., Robinson, D., &amp Clarkson, R. (2007).After the merger: The authoritative guide for integration success.New York: McGraw-Hill.

Pride, W. M., Hughes, R. J., &amp Kapoor, J. R. (2010). Business.Australia: South-Western/Cengage Learning.