Assessing Gamesa MBA project
Please see attachments This is a masters project that both the writer and I will be doing for comparisons. The project is UK pounds, but the company looking to make the acquisition reports both in US $ and UK pound. the Ratios that have been attached are the ones that need to be done with a explanation to each one / recommendation. Let me know if there are any questions regarding this assignment. Once again this is a MBA assignment.
GEMBA AFM Assignment, Summer 2013
The scenario below is fictional, but is intended to be a realistic example of the financial analysis a company may conduct. Please use real world information from websites, company accounts and other sources as appropriate in answering the assignment.
Assessing Gamesa
The senior management of Wood Group are considering options for the company’s future and to diversify the sectors they serve with a view to developing a presence in new power generation technologies. They are aware that this will mean dealing with companies that are very different to the large oil & gas companies who have been their major customers over many years. The commercial director considers that an acquisition of Gamesa, the Spanish wind industry company is possible.
“The share price has risen well over 100% over the last year, showing some confidence it its future. Its market capitalisation is still below €1 billion – I reckon its worth a go”.
The rest of Wood Group’s senior management team have yet to be convinced by the commercial director’s enthusiasm, however, they wish to understand more about the continuing financial health of Gamesa’s business and are impressed at its decision to restructure and withdraw from the US.
You have been recently appointed as the “Number 2” in the finance department and the finance director approaches you to undertake a fundamental analysis of Gamesa, she tells you:
“Maybe the commercial director is right; perhaps I’m just a cautious accountant. Anyhow, please carry out a CORE analysis of Gamesa and advise me on whether you think it would be a good acquisition at any price (I’ll get someone else to look at how much we’d have to bid). By the way, if you recommend that we should buy it I’ll make sure you end up being the finance director of our new wind division – work out for yourself whether that is a poisoned chalice! I’ll provide you with an adjusted and more useful set of accounts for 2012 when you are really considering 2012 as a base for the future of the company.”
Required
Write a report for the finance director of Wood Group reviewing Gamesa’s recent business and financial performance, as well as it’s current and likely financial health over the next few years. Your report should focus on Gamesa, though referring to other companies (Vestas, for example) would significantly enhance your analysis be credit-worthy (detailed analysis of other companies is not required). You should use the CORE approach as your primary tool and structure for the analysis; further credit is also available for consideration of fit and synergy. Conclude by clearly explaining your recommendation to pursue or not pursue a takeover of Gamesa.
Assessing Gamesa MBA project
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Introduction
Wood Group is an oil and gas multinational corporation seeking to diversify its business interest through the possible acquisition of Gamesa Corporation headquartered in Spain. Gamesa is a global manufacturer that engages in the construction of wind farms, as well as fabrication of wind turbines. The company is headquartered in the northern part of Spain in a town called Zamudio, Biscay. The basic operations of the company include, the management, selling, and development of wind farms while at the same time, it supplies them with wind turbines. The company is ranked fourth amongst wind turbine manufacturers in the world, and it is the best company in the Spanish market. Wind power is strongly advocated for by environmentalist, and Gamesa’s contribution to environmental protection has been a whooping 52 million tons of carbon dioxide emissions on an annual basis.
The company was established in 1976 as a new technologies manufacturer, and it was not until 1194 that the company established its subsidiary to deal with the manufacture of wind turbines. It became a listed company in late 2000 and later joined the IBEX 35. It has achieved global status, priding itself as a listed member of the sustainability Index on the Dow Jones. It is also ranked amongst the 100 sustainable companies on the Global 100 Index. The company focuses on the provision of technologies that aid in sustainable energy production with wind power as its base. Wood Group’s interest in the company serves well in its diversification efforts, but scrutiny on the financial aspects of Gamesa is necessary before acquisition is considered (Plunkett, 2011). The company’s financial reports offer a compelling platform for the scrutiny of the company’s operations in the past and future predictions of its performance as analyzed in this paper.
Analysis of the company’s performance in 2012
Gamesa’s operations in 2012 encountered many challenges that had significant financial implications to the company. The company had recorded tremendous improvements in its financial operations recording consistent growth in sales and profits in general over the last five years. Renewable energy markets were affected in the year due to reduced funding from the major economies of the world limiting the operations of Gamesa. The financial reports of Gamesa for the year ended 2012 were negative against the backdrop of increased competition in the wind power sector and the low growth rate of the industry. However, the company weathered the storm fairly well, and that was attributed to its geographical diversification and its normalized margins.
The adverse effects of the financial performance of the company necessitated it to take measure in instituting future strategies to ensure continued improvements in its performance. Comparison of the company with other players...
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