This report examines the processes used by the Australian subsidiary of a large New Zealand public company in the evaluation of a Queensland Government instrumentality, Q-Net, as an acquisition target.
In the evaluation of the target, several factors were discovered which had an organizational, rather than a financial, influence on the purchase decision. These altered the evaluation process, and required an examination of the background of Q-Net, as well as an assessment of the viability of the takeover company in changed circumstances.
A total of three tenders - alone, and as a member of two separate joint ventures - was submitted. The tenders were not successful, and a sale was announced to Parry Corporation. Subsequently, that company did not proceed with the sale, and as this report is submitted there has not been an announcement of a new purchaser.
Concurrent with the tender preparation, the subsidiary was experiencing organizational difficulties with its New Zealand parent, and this report examines the relationship between a viable tender and the organizational strength of the tenderer. It concludes that there is a need for the establishment by a parent company of firm guidelines to be followed by subsidiaries tendering for large projects, in order to keep both parties aware of the needs and goals of the parent during times when circumstances may change markedly.
The report also concludes that the determination of the final purchase price in such an evaluation is often dependent upon matters which have only an indirect relationship to the original issue. An example cited is the government offsets policy for attracting manufacturing industries to Queensland.