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Merger report - Reading

Read this article from the latest issue of Stock Dealer Today magazine, and then answer the questions opposite. When you have finished, click 'answers' to check your results.

Timmson -Woolards deal off.

It seems that the merger of Woolards freight and Timsson transport will not go ahead after all, as the European regulators have blocked the merger plans of the two companies on competition grounds.

The news comes as a blow to Woolards shareholders, who had seen their company's share price soar in the wake of the merger announcement last month. PR manager Peter Larsake said that "the company is taking time to consider its response, and there will be an emergency meeting of the board on Wednesday when we will decide where to go from here." While the board decides, the market has already passed judgement, cutting the share price by more than 40%.

Unions were jubilant, as it was expected that many of the profits from the merger would be achieved by cutting jobs, especially in the Woolards storage depots, which are less modern and efficient than those of Timsson. Woolard's drivers were also relieved as many of them faced redundancy, or the prospect of reduced overtime.

Despite its failure to merge with Timsson, it is unlikely that Woolards will remain independent for long. It lacks the size to enjoy the economies of scale of its larger competitors, but is too big to give its customers personalised service. Unless the firm is able to find itself a market niche in the very near future, it risks a takeover. Already the predators are circling, attracted by the low share price. The problem is that Woolards is loaded with debt, and any new bidder for the company is unlikely to have the cash pile that made Timsson such as good partner. Expect the shares to fall further.


1. Why can't Woolards and Timmson merge their companies?
a. They are European.   
b. The share price has changed.   
c. They have too few competitors.   
d. Woolard's shareholders objected.   

2. What did the failure of the merger do to Woolard's share price?
a. Raised it.    
b. First raised then cut it.   
c. Cut it.   
d. There was no effect.   

3. What will the Woolard's board do next?
a. They don't know.   
b. Sell their company.   
c. Cut the share price.   
d. Ask the unions for help.   

4. How would the merger have saved Woolard's money?
a. Timsson would give them money.   
b. The unions would have to pay money.   
c. They could sell more shares.   
d. They would need fewer employees.   

5. What does the writer think will happen to Woolard's?
a. It will become a predator.   
b. It will become bigger.   
c. Someone will buy it.   
d. It will owe a lot of money.   

6. Why does the article say another company might want to buy Woolard's?
a. To get a freight business.   
b. Because it is cheap.   
c. For its cash pile.   
d. Because they are competitors.   

7. What it the problem with buying Woolard's?
a. It owes a lot of money.   
b. There are too many predators.   
c. Timsson still wants it.   
d. The share price is too low.   

8. How does the writer seem to feel about Woolard's future?
a. Uncertain.   
b. Jubilant.   
c. Impartial.   
d. Pessimistic.