Global Mergers and Acquisitions / Sirius XM Radio

Global Mergers and Acquisitions
Student’s Name
Institution
Global Mergers and Acquisitions
Question one
For the e-activity, I selected Apple Incorporate which applies US GAAP in the treatment of impairment. According to generally accepted accounting principles, the impairment charge is to be allocated to the cash generating units. The fee is assigned to the zero or non-negative values of cash generating units. It implies that the applied cost will highly depend on the carrying value of the cash generating unit. On the other hand, international financial reporting standards specify that goodwill is allocated to the amount of cash generating units. It means a customer will adjust the value of the goodwill based on the value of cash and non-cash generating activities compared to GAAP which allocates the charge according to the amount of cash-generating units (Davelle & Rizzato, 2012)
Stakeholders are likely to react to the impairment negatively since it decreases the value of the cash generating assets of the business. Most of the affected stakeholders are the shareholders and management who have an interest in the performance of the firm.
Question 2
One of the latest mergers occurred between Amazon and Whole Foods. The transaction which was finalized in 2017 resulted in an increase in market value of Amazon which was the acquiring company. The acquisition value was $13.4 billion, and it resulted in the rise in the valuation of Amazon by an equivalent amount immediately after the deal.

On the other hand, the impairment cost of Amazon goodwill decreased. This is to imply that the value of Amazon goodwill increased following the transaction.
The most likely impact of the acquisition of Whole Foods by Amazon is the improvement in the goodwill which will create a good image for Amazon. Amazon will be viewed as a sound entity committed to the long-term success and thus attract more customers. The merger will develop customer’s trust and also an attraction of good talent. The merging of the two companies will increase the market value and market share thus increasing the sales of Amazon (Taylor, 2017).
“Sirius XM Radio”
Question 1
The acquisition of XM radio by Sirius radio suffered significant legal setbacks. One of the severe impediment relates to the Federal’s approval of the transaction. The Federal communication commission in the USA took more time to approve the merger. The geographical complication also set in as a result of the acquisition. The Merger affected Canada and USA where the two companies carried out their activities (Scarpa & Schell, 2015). The acquisition threatened existing employees of their jobs despite the fact that most of the employees retained their position. However, offices like the CEO on the XM radio.
However, the merger came with many positive implications for the two companies. The first one is the customer base. The two companies had a large customer base, and the acquisition increased the market power. Other costs relating to employee costs and research and development also reduced significantly (Scarpa & Schell, 2015). The licensing fee is also set to decrease with the merger. The merger will also bring together a bigger pool of expertise that is of benefit to the two merging companies that will propel the growth of the firms.
Question 2
I recommend a contract extension for Howard. The merger will bring change to the two companies. However, the Sirius radio should reshape the show and make it relevant to the new brand after the merger. The success of the show makes it useful to the radio even after the merger. Since every company is in business to make profits, Howard’s show is a potential of earnings to the company. Therefore, the show could be remodeled to reflect the current state and take advantage of the market.
References
Devalle, A., & Rizzato, F. (2012). The quality of mandatory disclosure: the impairment of goodwill. An empirical analysis of European listed companies. Procedia Economics and Finance, 2, 101-108.
Scarpa, C., & Schell, E. (2015). U.S. Patent No. 9,036,720. Washington, DC: U.S. Patent and Trademark Office.
Taylor, K. (2017). Here are all the changes Amazon is making to Whole Foods (AMZN). http://www.pulselive.co.ke/bi/strategy/strategy-here-are-all-the-changes-amazon-is-making-to-whole-foods-amzn-id7599847.html