ACME Wheels

ACME Wheels is a global manufacturer of auto parts specializing in high-quality steering wheels for luxury cars. Headquartered in Toronto, ACME was founded in 1981 by the husband-and-wife team of Julius and Sandra Marcotte. ACME manufacturers its steering wheels in plans located in Brampton, Ontario; Gatineau, Quebec: Louisville, Kentucky, USA; Bremen, Germany; and Torino, Italy. Its customers include most of the best-known makers of luxury cars. It has grown and been profitable since its start-up; 2018 revenues are estimated at Cdn$1.3 billion, with after-tax profits of Cdn$175 million.

ACME is still owned by the Marcottes. Julius is an expert designer with a background in engineering; Sandra is an ex-advertising executive who has close connections with ACMEs clients. They had hoped to pass the company on to their children daughters Sophia and Anna, and son Laurent but none of the children are interested in running or owning the family business; they are all following successful professional careers of their own.

The elder Marcottes have decided that it is time for them to retire, and are looking for an exit strategy. They believe that ACMEs senior management team is strong and could carry on successfully under the leadership of the current senior vice-president of marketing. Wing Chen, and the vice-president of finance, Tom Sawyer. A large part of ACMEs success has been the Marcottes willingness to hire highly-qualified professionals, pay them well, and let them do their jobs.

The Marcottes have come to you for advice on a proposal they have received from Parva International, a U.S. based auto-part manufacturer. Parva has offered to buy ACME for US$800 million, half in cash and half in common shares of Parva. Parva is a relatively young, fast-growing mainly through acquisitions of companies like ACME. Ms. Slick is known as an aggressive negotiator who buys companies, cuts costs ruthlessly, and moves on to her next acquisition.

Question - analyze the issues, evaluate the alternatives, and make appropriate recommendations.