Emergency Board Meeting of
TheTarget Corporation and The Image FX Advisory Committee
Attendees
CEO of Target
CIO of Target
CFO of Target
Image FX Finance Advisor
Image FX Marketing Advisor
Image FX Human Resources Advisor
Image FX SAP IT Advisor
Image FX Risk Reduction Advisor
Image FX Research and Development Advisor
Purpose
Proposal to merge Image FX with the Target Corporation
Options
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Peaceful merger between Target and Image FX
Hostile takeover of Image FX
Parting of ways
Minutes
A press release (handout) in The Wall Street Journal has leaked news about a startup
company by the name of Image FX, who is in the process of releasing cutting edge,
sunglasses. Target’s CEO got wind of the news and has called an emergency Board
Meeting to propose a merger.
Target
CEO
 It has come to my attention that a startup company is in the wings,
namely, Image FX, and plans to produce sunglasses.
 Target wishes to expand its product line and is interested in what
Image FX has to offer. Most of our major competitors are already
selling sunglasses.
 If Image FX can provide a new product line that is better and less
expensive than our competitors, than Target definitely will propose
a merger.
Target
CFO
 Target is a multi-million dollar corporation; and we have come here
today ready to fund Image FX with the necessary assets to produce
their new product line.
 We understand that Image FX’s R&D has cutting edge plans to
develop high tech sunglasses and that you are asking for $75K to
establish your business.
 Target feels that additional funding may be required and wishes to
support this development for the mutual benefit of Target and
Image FX.
 We merely wish to provide the funding and have Image FX continue
the R&D and Marketing support for the sunglass product line.
Target’s
CIO
 Target has been using departmentalized systems, however, with this
proposed expansion wishes to incorporate an ERP system.
 Target is interested in Image FX’s SAP research and would like to
fund Image FX to startup using SAP and later incorporate all of
Target’s existing systems.
IT Advisor
 Image FX would like to review Target’s systems and prepare an
integration plan to ensure feasibility and cost.
 We need to determine which of the SAP modules to implement and
prepare a budget for the startup and later the integration.
 Do you propose that Target’s IT department be responsible for the
implementation?
CIO
 Image FX will startup as a fully separate entity of Target.
 Target will become the parent company and the selling partner for
Image FX. Image FX’s IT department will be responsible for all of
the SAP development and implementation work to install SAP.
Risk
Reduction
Advisor
 We need to make certain that any changes to the SAP project are
fully funded and present no risk to the startup of Image FX.
 We have a great product and want to ensure that it goes to market.
 We will be preparing a complete Risk Reduction Plan for
negotiation.
CEO
 Target has heard nothing but good things about Image FX’s new
product line and is anxious to review the designs within the next few
weeks.
 At that time, we will decide if additional funds are appropriate.
Marketing
Advisor
 Is Target proposing Image FX change its logo?
CFO
 Image FX will operate as a separate entity of Target and will retain
its own identity.
R&D
Advisor
 What involvement will Target have in the design and development
of our eyewear?
CEO
 Target will become the Sales Department for Image FX.
 The product line will remain the full responsibility of Image FX.
HR
Advisor
 Do you propose that the Image FX’s HR department merge with
Target’s HR department?
CFO
 No. Image FX will have its own benefits and pay scale separate
from Target and will need to hire more employees as soon as
possible.
 Please have your HR department review job descriptions and begin
hiring immediately.
Finance
Advisor
 What incentives and assets are Target prepared to give Image FX to
initiate smooth and peaceful merger?
CFO
 Target plans to include Image FX in their Employee Incentive
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Program.
Individual awards and Team awards will be distributed in the form
of stock options. The stock options will be acquired based on a
rating system determined by the advisors in each department.
Stock options will be valued based on a vote taken at the Board of
Directors Meeting on March 10, 2004. Those persons holding stock
options will have one vote per option on whether to have a peaceful
merger, a hostile takeover, or a parting of the ways.
The value of the stock options will be based upon the final decision.
If the vote is for a peaceful merger, the options will be worth a ratio
of 1:2. If the vote is for a hostile takeover, the options will be worth
a ratio of 1:1. If the vote is for a parting of the ways, the stock
options will be deemed worthless.
Options will be redeemed for prizes, including a trip, at a celebration
on March 17.
CEO
 As for the seed capitol, Target is prepared to give Image FX a sum
of $5 million to begin the merger.
CIO
 Target expects that SAP will likely cost at least this much, however,
we prefer you begin with this figure and we are willing to negotiate
upwards if reasonable.
CFO
 Ladies and gentlemen, I believe this meeting summarizes our
proposal.
 Target plans to provide the assets to startup Image FX as a separate
entity of Target and would like to begin the negotiations
immediately.
CIO
 At our next meeting, I want a budget proposal and draft
implementation plan from the Image FX SAP IT department.
 At that time, a decision will be made as to whether or not more
funds are required.
CEO
 I would also like to see the preliminary budget proposal and
business plans from all of the other Image FX departments so that I
can determine if other assets are required and if a merger is feasible.
 Ladies and Gentlemen, I believe that is all we would like to discuss
today. I would like to thank everyone for being here.
 I feel that together we can accomplish a successful and peaceful
merger that will benefit us all.
HR
Advisor
Address the group with pros (acquire seed capitol and stock
options, including sales division, creditability established with
customer) and cons (give up sole ownership of Image FX) of the
merger and summary of next steps.