Making the right decision Research a company that has been i

Making the right decision. Research a company that has been in the news for a significant business decision within the last 18 months. Summarize the decision that was made, and state your opinion on whether it was a good or bad move for the company. Post a link to the article in your thread for everyone to read, and give feedback to two of your peers.

Solution

Company name: Tree House Education and Accessories

Country : India

This is the company in pre-school chain which has been facing vary much volatility in the last few months due to various changes such as the stock selling dilution by promotors that led the speculation on some negative news related to the company.

Just soon after this , there was a news that the company is in talks with Zee learn (another pre-school chain company in India) to merge its operations with Zee Learn. It was a positive decision from the point of view that the consolidated entity will have more market share and less competitive pressures that will result in higher profitability. But the biggest negative regarding the decision was that the Tree House board approved the deal at very low share swap ratio of 5.3 shares of Zee learn per share of tree house owned that was only 6% premium to the tree house\'s market cap.

I will overall rate that decision as negative because the company is going to merge with Zee learn with is far low profitable company and also held lots of debt, while Tree house has much strong fundamentals. So Tree house decision appears to be negative for the company as it will consolidate with the company with less strong fundamentals and at the same time investors are getting bad deal.

Link of the news atricle: http://www.business-standard.com/article/markets/tree-house-education-zee-learn-dip-on-board-s-nod-for-merger-115122400120_1.html