Of strategy through movies and arbit stuff

One of my favorite courses this term is winding up. Strategic Management or Corporate Strategy and Policy as the gentleman teaching us, Proff Ganesh Prabhu likes to call it. He is really an amazing professor. Learnt a lot about real life companies, analyzing their environment, their strategies and also how to deduce and solve their problems. More than three hour session today and no one is complaining. How can we if he decides to give us a lesson or two in hostile takeover and principles of shareholder wealth maximization with a movie - Other People's Money This review describes this Derry Devito comedy as a business essay. Danny Devito plays the role of short greedy weird Larsen Garfield. The star cast includes Penelope Ann Miller and Gregory Peck. Danny takes over undervalued companies and makes money by liquidating them. His next target is New England Wire and Cable Limited. The company is unlevered and would fetch 2.5 times its share price even if sold as scrap. But the owner ofcourse do not want to loose the company.

That reminded of the just failed takeover attempt by Philip Green Of Marks and Spencers. Three bids which were rejected by the Marks and Spencers Management. The shareprice did fall after te takeover bid failed as this article states, but according to analysts the company gained overall because of the measures that the bid prompted chairman Stuart Ross to adopt. Plan to look for more info and financial data about the case when I get some time. Useful links and contributions are most welcome.....

Anyway in the class discussion the proff said management puts their careers in stake in an organization and hence it is probably not unreasonable on their part to expect something more than ordinary shareholders. He justified the expectation of some extra compensation expected by management in case of takeovers etc and how that would increase efficiency by increasing their stake in the system. Would it? Am not sure actually. If that were the case Enron, Arthur Anderson would not have happened. After all isn't is an accepted and logical conclusion these days that ESOPs more often than not lead to artificial inflating of stocks prices. Wanted to argue/discuss but then it was almost 10 pm and junta looked as if it needed food so gave up the temptation for CP :) ..Peer pressure works...;)