Case Interview Question #00423: For this case, you are advising the CEO of DuPont (NYSE: DD), a global chemical company based in Wilmington, Delaware, USA. The company’s manufacturing, processing, marketing, research and development (R&D) facilities, as well as regional purchasing offices and distribution centers are located all over the world.
As one of the largest manufacturers of basic chemicals, Dupont has been facing stagnant growth and profits for years. Recently, they are considering the acquisition of a rechargeable battery manufacturer to stimulate growth and profits. Is this a good idea? What are the issues they should consider in making the final acquisition decision?
Additional Information: (to be given to you if asked)
The client Dupont is the largest national manufacturer in their product line.
Rechargeable batteries industry: (Do not give out this information unless specifically asked – this is the key to solving the case)
- Rechargeable batteries is a high-growth industry.
- Growth is being fueled by advances in information and telecommunications technology, especially the explosive growth in the use of laptop PCs, cellular phones and other mobile devices that need to be powered by rechargeable batteries.
- This industry is dominated by Japanese low-cost manufacturers with high volumes.
- Main customer base will be OEMs (original equipment manufacturer) of laptop PCs, tablets, cellular phones and similar mobile equipment (ipod, MP3 players, portable video game players, GPS, etc).
- Key success factors in this industry are:
- Ability to bring product to market quickly.
- Constant innovation.
- Ability to draw a price premium for innovation before imitators and low-cost producers enter the market.
For a merger and acquisition (M&A) case, usually two key issues need to be considered: Internal and External.
1. Internal Issues