Merger and Acquisition Report: Walmart and ASOS Analysis

This report provides a comprehensive analysis of a potential merger between Walmart and ASOS, examining the strategic and financial implications of the deal. The paper begins with an introduction outlining the background of the study and the rationale for exploring this merger. A literature review is conducted, defining mergers and acquisitions and exploring the reasons behind such business strategies, including market expansion and increased shareholder value. The core of the report analyzes the strengths of the proposed merger, such as market penetration, meeting customer needs, and product innovation, alongside weaknesses like loss of control and potential costs. The findings section synthesizes the arguments, highlighting the potential financial benefits and market advantages for both companies. The conclusion summarizes the key points and offers insights into the potential success of the merger, emphasizing the strategic fit and potential market impact. The report includes references to academic sources supporting the analysis.

Running head: MERGER AND AQUISITION
Merger and Acquisition
8/5/2019

MERGER AND AQUISITION 1
Table of Contents
Introduction................................................................................................................................2
Literature Review...................................................................................................................2
Strength and Weakness of Merger.........................................................................................4
Strength of Merger.............................................................................................................4
Weaknesses of Merger.......................................................................................................5
Findings of the Article...........................................................................................................5
Conclusion..................................................................................................................................6
References..................................................................................................................................7

MERGER AND AQUISITION 2
Introduction
Research Title – Merger of Walmart and ASOS
Background of Study
Today, we live in an era of major economic change, where acquisitions and mergers are the
key tools of business, adopted by several businesses across the world. According to the
philosophy of shareholder value mergers and acquisitions not just create a new social,
cultural, and economic environment but it also allows strong business growth in comparison
to the competitors. In addition to this, it offers entrepreneurs' rewards for their efforts,
confirming weaker businesses are more rapidly swallowed, or poorer, made immaterial
through exclusion (Duksaite and Tamosiuniene, 2017). The paper discusses the concept of
merger and an idea of a new merger between Walmart and ASOS. Besides this, the paper is
discussing the strength and weaknesses of the merger between both the companies in order to
identify whether the planning of growth will work or not in the future.
Literature Review
According to Abbas, Khalid and Butt, (2014), a merger is said to be an agreement that is
framed to unite two existing businesses into a single new company. There are a different kind
of mergers and also reasons why businesses complete mergers. Acquisitions and Mergers are
generally accepted by the businesses to expand the reach of the company or increase the
share in the market. All these can be done to increase the shareholder value. A merger is also
called as the voluntary fusion of two businesses on majorly equal terms into a new entity. The
companies that mutually agree to merge their business are generally equal in the context of
operations, customers, and size, etc. Unlike a merger, Acquisitions are not voluntary and
comprise a single company that is actively buying another company. As stated by Malik,

MERGER AND AQUISITION 3
Anuar and Khan, (2014), Mergers is commonly done for gaining the share in the market,
decreased the cost of the operation, expanding business in new territories, increase profits,
and revenues, all the activities that offer an advantage to the shareholders of the company.
With the merger, the company's share is divided to the existing shareholders of both the
businesses that are getting merged.
Walmart is one of the well-known multinational retail corporations of America that operates
a chain of grocery stores, discount department stores, and hypermarkets. Company deals in a
different segment of business and are regularly expanding its business to increase its market
share as well as revenue (Schuetz, 2015). Walmart is presently getting involved in different
mergers and acquisition to increase its share in different markets. It must get involved in the
merger with ASOS Curve which is a British online fashion and cosmetic retailer. The
company was established in the year 2000 in the market of London, majorly target young
adults. It is known in the market for offering plus size clothing for the women in the market
for all the occasions (ASOS.Com, 2019). By merging the business with ASOS Curve,
Walmart will be able to expand its business in the plus size clothing. In addition to this, this
merger will offer benefit to the ASOS Curve in increasing its share price by getting linked
with Walmart which is a brand known across the world. This merger will be to increase the
number of brands offered by the company. ASOS sells its clothes in sizes from 16 to 30 and
targeting the segment that is ignored by Zara and other main retailers in the market (Capon,
2019).
The merger between Walmart and ASOS will result in gaining the highly skilled staff,
knowledge of the industry and other different business intelligence. For example, the good
management and procedure system of Walmart will be useful for ASOS Curve to improve its
own system through the merger by using the skills and resources of the company. Besides

MERGER AND AQUISITION 4
this, the merger will enable ASOS to gain access to valuable and required assets for the
development of new business, product, or segment. It will enable better distribution as well as
production facilities to both the businesses and making less expensive operations (Makri,
Hantzi and Antoniou, 2012). In addition to this merger will result in increasing the market
share of Walmart and will support it in expanding the business in the retailing of plus size
clothes for women. Further, the merger will lead to making a wider customer base for both
the businesses. ASOS can benefit from using the wide distribution channel and competencies
of the supply chain of Walmart for the business.
Strength and Weakness of Merger
Strength of Merger
Penetrate the new market – Famous businesses recognize the market need and put efforts to
meet it. Similar types of business that desire to increase its market share get involved in the
merger. Market penetration is all about expanding the business in a new geographical area or
a precise niche in a specific industry (Crane, 2011). For instance, Walmart the successful
business which is the retail chain of hypermarket, grocery, etc. can merger with ASOS Curve
which deals in offering plus size clothing for women such that company could gain entry to
the clothing business of plus size products and give competition to the existing clothing
retailers like Zara. Besides this, it will enable Walmart to cover the increase in market share
in the United Kingdom market.
Meeting the needs of the customers – Merging with Walmart enable ASOS to meet the needs
of the increased customer base of women who desire for the designer and high quality plus
size products in the American and other markets where Walmart operates its business.
Product Innovation and Development – The merger between Walmart and ASOS will enable
to introduce new and innovative designs for the women who have limited designs in clothes

MERGER AND AQUISITION 5
to wear (Faulkner, Teerikangas and Joseph, 2012). The strong research and development
team of Walmart will support the company in designing different design and clothes for the
customers. In addition to this, the merger will support ASOS to get involved in the different
segment such that plus size clothing options for men.
Improving Financial Position – Merging with Walmart will enable ASOS to improve its
financial status. Through the merger, the company will be able to make use of the resources
and assets of Walmart (Jallow, Masazing and Basit, 2017).
Weaknesses of Merger
Loss of Control – According to Vijaywargia, (2016), for the small businesses, a merger is
considered to be a loss of controlling power over the business while taking important
decisions for business growth. After the merger, the major power is transferred to the
business that is more powerful in terms of revenue, market share, and extended operations. In
the case of Walmart and ASOS Curve merger, there is a possibility that the major power of
decision making remains with Walmart due to its leading position across the world in
offering different types of products.
Costly – Merger can eventually result in saving the cost of both the businesses however the
procedure of merging two businesses could be costly. The merger is comprised of different
legal issues which lead to paying consultation fees and legal fees.
Loss of Staff Members – Merger could lead to layoffs and many other measures of cost-
cutting for eradicating redundancies (Hamel, 2019). For example, if two retail businesses like
Walmart and ASOS merger then it could be cost-effective if they reduce the staff from a
similar segment of the retailing which can lead to layoff.

MERGER AND AQUISITION 6
Findings of the Article
A merger is a business tool that is used by the companies to expand their operations in
different market or segment. In support to this Malik, Anuar and Khan, (2014), stated that
Mergers is done to increase the share in the market, reducing the cost of operation, expanding
business in new territories, increase profits, and revenues, all the activities that offer an
advantage to the shareholders of the company. According to the above analysis, it could be
said that merger support in improving the financial status of the business. It could be
provided from the statement presented by Jallow, Masazing and Basit, (2017), that merger
results in improving the financial status and position of the business as it increases the
customer base and improve the reputation of the business. In addition to this, it has been
identified that Merger can be a major weakness for the businesses as it results in losing
control over the business. It could be supported with the statement of Vijaywargia, (2016),
for the small businesses; merger could result in losing the controlling power over the business
while taking important decisions for the business growth.
Conclusion
The above paper has presented a brief analysis of Merger which is one of the business tool
used by the business to expand operations and increase the market. The paper has majorly
discussed a new idea of a merger between Walmart and ASOS Curve to offer plus size
clothing for women. The analysis has highlighted that this merger could result in increasing
the dominancy of Walmart in the clothing market in comparison to other retailers like Zara as
these businesses do not offer plus size clothes. Further, the paper has also discussed the
possible weaknesses for the business to enter the merger like loss of control, loss of staff
members, increase cost, etc.

MERGER AND AQUISITION 7
References
Abbas, H., Khalid, A., and Butt, A. (2014) Merger Failures & Corporate Strategy: Change
Management to Solve the Query. International Journal of Sciences: Basic and Applied
Research, 13(1), 90-102.
ASOS.Com (2019) Women's Curve & Plus Size [Online]. Available from
https://www.asos.com/women/curve-plus-size/cat/?cid=9577 [Accessed 5 August 2019]
Capon, L. (2019) The 11 best shops for curvy girls [Online]. Available from
https://www.cosmopolitan.com/uk/fashion/style/a48606/best-shops-plus-size-curvy/
[Accessed 5 August 2019]
Crane, D.A. (2011) Rethinking Merger Efficiencies. Mich. L. Rev., 110(2011), p.347.
Duksaite, E., and Tamosiuniene, R. (2017) The Importance of Mergers and Acquisitions in
Today’s Economy [Online]. Available from
https://pdfs.semanticscholar.org/7e48/8a1961a55d5b74d131e15bfbbbd29bad617e.pdf
[Accessed 5 August 2019]
Faulkner, D., Teerikangas, S. and Joseph, R.J. (2012) The handbook of mergers and
acquisitions 2nd ed. U.K: Oxford University Press.
Hamel, G. (2019) Weaknesses of Mergers [Online]. Available from
https://yourbusiness.azcentral.com/weaknesses-mergers-7521.html [Accessed 5 August 2019]
Jallow, M.S., Masazing, M. and Basit, A. (2017) The Effects of Mergers & Acquisitions on
Financial Performance: Case Study of UK Companies. International Journal of Accounting
& Business Management, 5(1), pp.74-92.

MERGER AND AQUISITION 8
Makri, E., Hantzi, A. and Antoniou, A.S. (2012) Merger integration patterns, status of pre-
merger organizations, stress, and employee health post-combination. Journal of Business
Studies Quarterly, 4(2), p.113.
Malik, M.F., Anuar, M.A., and Khan, F. (2014) Mergers and acquisitions: A conceptual
review. International Journal of Accounting and Financial Reporting, 4(2), p.520.
Schuetz, J. (2015) Why are Walmart and Target next-door neighbors?. Regional Science and
Urban Economics, 54, pp.38-48.
Vijaywargia, T. (2016) Analyzing the Consequences of Mergers and Acquisitions on Human
Resource. Global Journal of Commerce & Management Perspective, 5(1), 32-34.