Philips' Acquisition of Alcidion: Stakeholder Analysis Report

This report examines Philips' proposed acquisition of Alcidion, detailing the strategies, stakeholder analysis, and potential obstacles involved. The report begins by assessing the majority stakeholders and the number of shares required for Philips to acquire Alcidion, including the need for a tender offer and the use of cash and shares for payment. It then explores Philips' acquisition strategies, focusing on diversification and geographic growth. The report also identifies potential obstacles, such as shareholder opposition and financial constraints, and outlines the regulations that Philips must adhere to, including the Foreign Acquisitions and Takeovers Act. The report concludes that Philips can acquire Alcidion by gaining approval from key shareholders and using a combination of equity and cash, while also addressing potential obstacles and complying with regulations. The report uses the annual reports of both Philips and Alcidion to support the analysis.

Report

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Assessing all majority stakeholders (number of shares) to see the Alcidion can be acquired by
Phillips.........................................................................................................................................1
Strategies to acquire the company...............................................................................................3
Identifying probable obstacles.....................................................................................................3
Regulations needed to be followed..............................................................................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Acquisition may be served as a corporate action that business unit undertakes with the
motive to explore operations and functions. Hence, acquisition occurs when buying company g
undertakes more than 50% ownership in a target company. The present report is based on
Philips, A Dutch technology company, which offers electronic products and service to the
customers. In this, report highlights the strategies that will be followed by Philips to acquire
Alcidion. Further, report also entails the obstacles that are associated with such potential
acquisition strategy.
MAIN BODY
Assessing all majority stakeholders (number of shares) to see the Alcidion can be acquired by
Phillips
From assessment, it has found that more than 50% ownership is required by Philips in
Aclidion to acquire the same. For this purpose, business unit needs to purchase the stock and
other assets of target company. In this regard, acquiring company such as Philips can make
payment in terms of either stock or cash or the combination of both. Annual report of Aclidion
for the period ended on June 2017 clearly shows that total number of shares accounted for
607779957 respectively. Along with this, annual report of Aclidion presents that approximately
52% stocks held by mainly three authorities namely Professor Malcolm Pradhan, Mr Raymond
Howard Blight and BSPE technology Pty Ltd (Annual report of Aclidion, 2017). Further, as per
the report published at 19 September 2017, list of main 20 holders of ordinary shares who hold
61.72% shares in Aclidion are as follows:

(Annual report of Aclidion, 2017)
Hence, for proceeding acquisition Philips need to make a tender offer to the Aclidion’s
BOD. This in turn helps in assessing the amount that Philips is ready to pay for Aclidions. Along
with this, tender offer also presents how long shareholders of Philips have to accept the offer.
Hence, without the acceptance or approval of such shareholders Philips would not become able
to acquire Aclidion.
There are mainly two sources that can be used by Philips for acquiring Aclidion such as
cash and shares. In the accounting year 2016, debt equity ratio of Philips accounted for .30:1
significantly (Annual report of Philips, 2016). Considering such ratio, it can be depicted that
Philips should undertake both cash and equities for making payment to Aclidion on approval. In
such combination, ratio of cash needs to be high over equity. By taking long term loan Philips
can generate funds and thereby would become to acquire Aclidion. Such strategy will also offer
benefit to the shareholders of Philips as they do not have to make payment of income taxes until
they receive the debt payment. However, at the time raising funds through debt and equity

company should keep in mind ideal solvency ratio such as .5:1. As per such ratio, Philips can
generate fund and become able to execute the deal of acquisition prominently.
Strategies to acquire the company
In the context of proposed acquisition, it can be said that Philips is placing emphasis on
undertaking diversification strategy. This in turn provides high level of assistance to the business
unit in offsetting the risk that takes place within own industry. Along with this, geographic
growth is another main factor that considered by Philips. For the purpose of acquisition,
company needs to make focus on identifying and presenting growth opportunities in front of
concerned stakeholders. This in turn helps in attracting them and helps in implementing
execution strategy.
Identifying probable obstacles
In the context of proposed acquisition obstacles assessed are enumerated below:
 From financial statement evaluation it has assessed that three shareholders have more
than 50% shares in Aclidion. Hence, out of the concerned three shareholders if one will
deny or refuse proposal made by Philips then it creates difficulty. The rationale behind
this, for the purpose of acquisition 51% stake in the concerned firm is highly required.
 Along with this, company will also face issue indirectly when generating cash through
long-term debt. Moreover, when business unit takes resort of debt for fulfilling monetary
requirements then it closely impacts brand image. Usually, investors think that, in the
case of long term debt, company is not highly capable or lacking enough funds for
acquiring other units. Thus, such dilemma may also be served as an obstacle in
acquisition.
Regulations needed to be followed
For acquiring Alcidion, Philips need to comply with some specific rules and regulation
associated with merger & acquisition activity. The Foreign Acquisitions and Takeovers Act
(1975 FATA) is highly applicable on international acquisitions which in turn lays emphasis on
examining whether concerned proposal is in the context of national interest or not (Merger
control in Australia, 2018). Along with this, before acquisition company needs to ensure that
regulatory bodies have reviewed the concerned transactions. On the basis of legal and regulatory

aspects company need to ensure that company needs to ensure that such concerned acquisition
strategy will not create monopoly and anti-competitive circumstances within the health care
sector. Thus, on the approval of regulatory bodies concerned parties can exchange the funds and
deal is closed. Referring such specific process acquisition of Aclidion can be done by Philips.
CONCLUSION
By summing up this report, it has been concluded that by taking approval from mainly
three authorities such as Professor Malcolm Pradhan, Mr Raymond Howard Blight and BSPE
technology Pty Ltd, Philips can acquire Aclidion. Along with this, it has been articulated that
Philips should use the combination of equity and cash for meeting monetary requirements
regarding acquisition. Besides, this, it can be inferred that by developing sound framework
Philips can deal with the probable obstacles more effectively.

REFERENCES
Online
Annual report of Aclidion. 2017. [Online]. Available through:
<https://www.listcorp.com//asx/alc/alcidion-group-limited/news/alcidion-30-june-2017-
annual-report-to-shareholders-1695163.html >.
Annual report of Philips. 2016 [Online]. Available through:
< https://www.philips.com/a-w/about/investor/financial-reporting/annual-reports.html>.
Merger control in Australia. 2018. [Online]. Available through: <https://iclg.com/practice-
areas/merger-control-laws-and-regulations/australia >.