An HSBC Acquistion

In early-April 2000, HSBC Holdings PLC agreed to acquire a majority holding in Credit Commercial de France (CCF). The agreement is conditional on HSBC acquiring a minimum of 50.1 per cent of the CCF voting shares and on regulatory approvals from the European Union (EU), France, and the United Kingdom (UK). Serious opposition to the planned merger between the two banking firms is not anticipated (Kamm, Carreyrou, & Bahree, 2000; "S&P Affirms HSBC Holdings Plc," 2000). Financial arrangements for the acquisition are expected to be completed by June 2000 (Portanger, 2000), with regulatory approval expected by year-end 2000 ("HSBC 'a Major Player in Europe,'" 2000). Major CCF shareholders that have already announced their intentions to tender their shares to HSBC will, if they follow through on these intentions, assure HSBC a minimum 58.8 per cent of CCF shares (Kamm, Carreyrou, & Bahree, 2000).

The proposed merger of the two banking firms is analyzed. The analysis focuses on (1) strategic choices made by HSBC in developing its acquisition strategy, (2) motivations by both firms for the merger, (3) a SWOT (strengths, weaknesses, opportunities, threats) analysis of the proposed merger, (4) analysis of the proposed merger within the context of Porter's Five-Forces Model of Competitiveness, and (5) challenges that will be faced by HSBC in relation to differences in corporate cultures should the merger be complet

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cessor was Banque Suisse et Francaise, which was founded in 1834 ("Credit Commercial de France SA," 2000). Revenues at HSBC were 23.7 billion in 1999. Revenues were down 9.5 per cent in 1999 from 1998. Income as a per cent of sales in 1999 was 14.2 per cent, which was a 42 per cent increase over 1998 (Wright Investors' Service, 2000b). Revenues at CCF were Ç7.3 billion in 1999, up five per cent from 1998. Income as a per cent of sales was five per cent, up 8.7 per cent from 1999 (Wright Investors' Service, 2000a). Internal Weaknesses HSBC has offered CCF shareholders either (1) Ç150 in cash for each CCF share or (2) 13 HSBC shares for each CCF share, which is the equivalent of Ç160 at the time the offer was made in early-April 2000 ("HSBC 'a Major Player in Europe,'" 2000). Some analysts feel that this offer overprices CCF, as the total cash bid for CCF is Ç11.08 billion, or 7.31 billion. HSBC management counters this charge with a contention that the proposed merger will have a positive impact on per-share earnings by year-end 2001 (Portanger, 2000). Nevertheless, the price for HSBC shares fell 5.5 per cent the day following publication of the HSBC offer for CCF. External Opportunities Acquisitions designed to create
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Approximate Word count = 2048
Approximate Pages = 8 (250 words per page)