Business Studies Course - Investment
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Merger report - Functions

Ivan is in trouble. Mr Blake is extremely angry with him. Read the conversation below, and see if you can understand what has happened. What is he doing, and why? When you have finished click on 'ANALYSIS'

Mr Blake: "So, Ivan, what do you think of this Woolard's business? Damn regulators interfering eh? And yet their chairman seemed completely certain that it would go ahead."

Ivan: "He wanted to believe it. But when you look at the amount of business the two companies do in the same places - they would have had a monopoly."

Mr Blake: "You know a lot about it. Have you been looking at it?"

Ivan: "Yes. I was planning to put about 40 000 in when the merger was announced. The savings looked good, but when I realised the merger would probably not go through, I dropped the idea."

Mr Blake: "And you also dropped the idea of investing in Pilbroch breweries?"

Ivan: "Oh .. indeed. It seems Peter had the same idea, and he locked up most of the available shares. There aren't many on the market. Pilbroch is a family firm, you know."

Mr Blake: "It's not like Peter to invest in something like a brewery. More your type of thing."

Ivan: "Well, I understand he made a good profit."

Mr Blake: "And then lost it all on Woolard's. And about 20 000 more. It seems he thought it was certain to do well.."

Ivan: "Ah."

Mr Blake: "You did a lot of reading on the merger, did you, Ivan? Lots of chairman's reports, for example? Did you leave little notes to yourself on your desk, suggesting it was a good thing?

Ivan: "Probably, yes. Good research is always important. I always research thoroughly."

Mr Blake: "I am sure you leave nothing to chance. So through its employees, my company has lost a lot of money. Please keep me informed about what investments you are planning next, Ivan. I want you to be confident that I know what is going on.

ANALYSIS