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Mergers & Acquisitions - MEFielding

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Mergers & Acquisitions
Mark Fielding-Pritchard
mefielding.com
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Reasons for Mergers & Takeovers
Economies of scaleSupply chain integration, backwards and forwardsExpansion, new or existing markets or productsElimination of competitorComplimentary resourcesManagement capabilityUtilisation of surplus fundsTax shields
mefielding.com
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Takeover of Unquoted Companies
Approach made and value agreed by negotiationThe biggest benefit is called bootstrappingA quoted company has a P/E of (say) 30A comparable unquoted company will therefore have a P/E of 15If the quoted company pays a premium and buys the unquoted company at a price based on a P/E of 20 it’s own share price will increase by 30 times the target’s earnings
mefielding.com
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Hostile Takeover Strategies
Market Accumulation followed by an Open Offer; (most common)Negotiated Deal with Financial Institutions followed by an Open Offer;Negotiated Deal with a breakaway Promoter Fraction followed by an Open Offer;Direct offer to Shareholders
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Takeover of Quoted Companies
Hostile takeoversBuild small holdingsLaunch dawn raids3% intentions announcement30% forced offer
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The Offer Document
Shareholders of target receive from the potential acquirerExplains why the offer should be acceptedTerms of the offer, choose from1) Share for share exchange2) Loan stock, or3) Cash
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Terms of Offer
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Defence Document
Rebuts offer or recommends acceptanceAs for offer document only rule is that what is included must be true
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Mergers & Acquisitions - MEFielding