Paper: Multinational Business Management

Paper code: 95.891A
Term 1

Lecturer: Dr. Toshiyuki Nakanishi
Assignment 2

“Agreement and Plan of Merger - Mattel Inc. and The

Learning Co”

Name: Nguyen Van Cuong
Student ID: 2156201

I.

INTRODUCTION
Conceptual framework
Nowadays the trend of expanding business by bought another company or call

merger are very popular. Merger is a deal to unite two existing companies into one new
company. Out of several types, one that two existing companies emerged into one newly
named company is common. The acquirer is commonly done to expand a company’s target,
expand into new customer market, or gain market share (Coyle, 2000)
Mattel is the world's largest toy maker with a vision “a truly company, with the very
best people, a compelling underlying strategy and resource for sustainable growth” (Mattel
annual report 1998). They were in a bid to sell more interactive products and expand its
direct channels and creating a substantial and profitability. Therefore, they were set to buy
the Learning Co producing computer games products and educational software products.
This merger case study of Mattel and Learning Co were on 13th December 1998,
both of the companies with the mutual agreement decided to merge, where Mattel was the
acquirer company, and the Learning Co was the targeted company. The acquirer
understands the benefit of merging was very important and necessary for future
development.
Synergy
In my point of view, this case of merger related to the market share and
specification product extension. They are two companies making completely different
product but they have the same market (Coyle, 2000). Matte was a toy company and
Learning Co produced educational software products. They both have the same market in
the United States and focus on same customers, kids. Matte wanted to sell more interactive
products creating a substantial and profitable by taking advantage of the technology product
of Learning Co and applying for the same market.

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II.

RESEARCH QUESTION

Why did Matte decide to buy Learning Co?
Firstly, Matte wanted to create a different connection between their valuable brands
and new high quality, technologically sophisticated products that were more attractive the
consumer. This kind of merge will help them expanding the market and substantial
contribution to growth and profitability.
Secondly, applying the Theory “The Successful cultural combination is positively
associated with the performance of international acquisitions” to answer this question
(Rottig, 2007, p.8). Mattel was dedicated to becoming a truly global company, which they
adapted proactively to local tastes. In this case of merging, the Learning Co had the
Canadian Sub (SoftKey Software Products Inc ) located in Canada with different culture.
After merging, through the cultural combination Canadian Sub would become a part of
Mattel in the future and help expand more market in Canada and bring the benefit to
company.
Thirdly, another theory applied to answer this question is “The Effects of
International Operations on the Market Value of the Firm” (Errunza & Senbet, 1981). The
benefit of merging on market value was clearly explaining on the agreement in May 1999,
after the merging the share of company slightly increased. The evidence is that each share
of Learning Company Series A Preferred Stock was then converted into 20 shares of
Learning Company common stock immediately prior to the consummation of the merger.
Pursuant to the merger agreement, each outstanding share of Learning Company common
stock was converted into 1.2 shares of Mattel common stock upon consummation of the
merger. As a result, approximately 126 million Mattel common shares were issued in
exchange for all shares of Learning Company common stock outstanding as of the merger
date. The outstanding share of Learning Company special voting stock was converted into
one share of Mattel Special Voting Preferred Stock. Each outstanding exchangeable share
of Learning Company’s Canadian subsidiary, Softkey Software Products Inc., remains
outstanding, but upon consummation of the merger became exchangeable for 1.2 shares of
Mattel common stock. (Agreement and Plan of Merger - Mattel Inc. and The Learning Co)
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How was the process taken place?
The Delaware General Corporation Law (DGCL) was in charge of preparing all
legal documents and granting shareholder to be in full force and effect until the termination
date and act for Mattel in this case.
The agreement was signed by Mattel, Learning co and Delaware General
Corporation on December 13, 1998 at 9:00 a.m., New York City time. All the further
actions following the Agreement will be completed by two companies. Both provided their
shareholders with the authority to make decision, and without their consent there is no
change they can bring in the agreement. They needed to do the shareholders’ meetings of
both companies and Publication of the proposal to merge the companies and notify the
creditors of the merger and handling objections the tax office and transfer the assets and the
shares (Coyle, 2000)
III.

A SAMPLING STRATEGY

This report would like to analyze the merging of wo companies which the Mattel was
the acquirer company and the Learning Co was the targeted company based on the theory
of the market value (Errunza & Senbet, 1981) and the cultural combination (Rottig, 2007)
to obtain more knowledge and understand more about the Merger of international company,
from individual point of view.

IV.

METHODS AND DATA COLLECTION

This report will use the secondary qualitative data with the secondary approach.
The data collect by using the IPU library database through using google scholar and
the website of the Mattel Company presenting a lot of information which correlate
with Merger of Mattel and Learning Co in an annual report 1999. Moreover, the

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electronic documents relating to the theory paper provided by Dr. Nakanishi are very
useful for me to create my own critical.
V.

ANALYSIS

In my point of view about the acquirer I think all the companies need to consider very
carefully about increasing market price when they decide to buy another company.
Because the different companies require different strategy, different concept, vision, and
product, people. When one company merge another company, they take almost everything
of the old one and create a new trend for this company. If this company doing good in
business, they can help increase the market price of the acquirer, and vice versa. My
suggestion is that they need another third party to do the evaluation of the company before
merging so that they can know the real value of the target company.
In the case of the target company, I can say that merger is a very good business for all
entrepreneurs; the target company they can sell their business with large amount of money
and do another kind of business. Another point of view is that they have more investors and
expanding business to the market through the acquirer.
Regarding to the theory of the cultural combination, it is also an advantage for the
acquirer that they can have more talent in human resource from another country, have more
business and more customers and open a new potential business. The target company can
get a new idea for operating company and approach a new way of management. Besides,
the parent company can expand the culture of the original country to subsidiary companies.

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References
Coyle, B. (2000). Mergers and acquisitions. Global Professional Publishi.
Errunza, V. R., & Senbet, L. W. (1981). The effects of international operations on the
market value of the firm: Theory and evidence. The journal of Finance, 36(2), 401417. Retrieved 17 June, 2016, from
http://onlinelibrary.wiley.com/doi/10.1111/j.1540-6261.1981.tb00455.x/full
Findlawcom. (2016). Findlaw. Retrieved 17 June,2016, from
http://corporate.findlaw.com/contracts/planning/agreement-and-plan-of-mergermattel-inc-and-the-learning-co.html
Mattel Website Retrieved 17 June, 2016, from
http://investor.shareholder.com/mattel/annuals.cfm
Rottig, D. (2007). Successfully managing international mergers and acquisitions: A
descriptive framework. International Business: Research Teaching and Practice,
1(1), 103-126. Retrieved 17 June, 2016, from http://new.aibse.org/wpcontent/uploads/2012/02/07rottig.pdf

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