Subject category:
Finance, Accounting and Control
Originally published in:
2001
Version: 03.04
Length: 18 pages
Data source: Published sources
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Abstract
On August 2nd, 2001, Teradyne, Inc (NYSE: TER) of Westford, Massachusetts announced that it would be acquiring GenRad, Inc (NYSE: GEN), a leading manufacturer of automatic test equipment and related software. Under the terms of the definitive agreement, each share of GenRad stock would be converted into .1733 shares of Teradyne stock. Teradyne believed that the acquisition would initially be dilative, but expected through synergies and an increase in demand, would become accretive in 2002. By September 2001, the economic condition of the United States had deteriorated. Accelerated by the terrorist attack on New York''s World Trade Centre Towers, American consumers further withdrew from traditional spending habits. During the month, Teradyne announced an expected third quarter loss of approximately $.32 per share. Previous analyst loss estimates were approximately $.11 per share. Amidst the economic turmoil and financial performance, the company began to eliminate 1,000 employees and reduced salaries of up to 15% for higher paid employees. Under the circumstances, the acquisition of GenRad may be in question. The board had to decide whether or not this was the right time to undertake such a complex integration and if the economy would recover in time to have the transaction contribute to earnings on schedule.
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Abstract
On August 2nd, 2001, Teradyne, Inc (NYSE: TER) of Westford, Massachusetts announced that it would be acquiring GenRad, Inc (NYSE: GEN), a leading manufacturer of automatic test equipment and related software. Under the terms of the definitive agreement, each share of GenRad stock would be converted into .1733 shares of Teradyne stock. Teradyne believed that the acquisition would initially be dilative, but expected through synergies and an increase in demand, would become accretive in 2002. By September 2001, the economic condition of the United States had deteriorated. Accelerated by the terrorist attack on New York''s World Trade Centre Towers, American consumers further withdrew from traditional spending habits. During the month, Teradyne announced an expected third quarter loss of approximately $.32 per share. Previous analyst loss estimates were approximately $.11 per share. Amidst the economic turmoil and financial performance, the company began to eliminate 1,000 employees and reduced salaries of up to 15% for higher paid employees. Under the circumstances, the acquisition of GenRad may be in question. The board had to decide whether or not this was the right time to undertake such a complex integration and if the economy would recover in time to have the transaction contribute to earnings on schedule.