Mergers & Acquisitions
Mark Fielding-Pritchard
mefielding.com
1
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
2
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
3
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
mefielding.com
4
Takeover of Quoted Companies
Hostile takeoversBuild small holdingsLaunch dawn raids3% intentions announcement30% forced offer
mefielding.com
5
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
mefielding.com
6
Terms of Offer
mefielding.com
7
Defence Document
Rebuts offer or recommends acceptanceAs for offer document only rule is that what is included must be true
mefielding.com
8
0
Embed
Upload