Question

Chemicals Ltd., a quoted chemical company, has until recently achieved a
steady increase in profitability over a number of years. It faces stern competion
and the directors are concerned about the dissatisfaction expressed by major
shareholders regarding performance over the last two years. During this period, it
has consistently increased dividends, but its share price has not grown at the
same rate as it did previously Khemco Ltd., a direct competitor, is similarly
experiencing a reduction in profitability. Its shareholders are diverse, with the

majority being financial institutions. Khemco Ltd. has been criticized for under-
investment and has achieved no product development over the last-two years.

'Following a concerted media campaign, Khemco Ltd. is facing prosecution for
discharging untreated pollutants into a river. Chemicals Ltd is seriously
considering making a bid to acquire Khemco Ltd. The directors of Chemicals Ltd.,
however, are •divided as to whether Khemco Lc. should be closed down or
permitted to continue reduction post-acquisition, if a bid is made. In their
situation significant staff redundancies should follow:
Required:
• State the strategic factors which Chemicals Ltd. would need to consider

before making a bid to acquire Khernco Ltd.
i) Discuss the social and ethical implications for the managers and staff of both
the companies, if the acquisition goes ahead;
ii) Discuss the environmental issues which would face the directors of
Chemicals Ltd. if it proceeds with the acquisition of Khemco Ltd.

Answer 1

Answer:

what is the answer of question one