Acquisition Of A New Company

A. Stock issuance costs are a part of the acquisition costs and the direct combination costs are expensed B. Direct combination costs are a part of the acquisition costs and the stock issuance costs are a reduction to additional paid-in capital C. Direct combination costs are expensed and stock issuance costs are a reduction to additional paid-in capital D. Both are treated as part of the acquisition price E. Both are treated as a reduction to additional paid-in capital 12. Lisa Co. paid cash for all of the voting common stock of Victoria Corp. Victoria will continue to exist as a separate corporation. Entries for the consolidation of Lisa and Victoria would be recorded in A. A worksheet B. Lisa's general journal C. Victoria's general journal D. Victoria's secret consolidation journal E. The general journals of both companies 13. At the date of an acquisition which is not a bargain purchase, the acquisition method A. Consolidates the subsidiary's assets at fair value and the liabilities at book value B. Consolidates all subsidiary assets and liabilities at book value C. Consolidates all subsidiary assets and liabilities at fair value D. Consolidates current assets and liabilities at book value, long-term assets and liabilities at fair value E. Consolidates the subsidiary's assets at book value and the liabilities at fair

For the corporation that has acquired another company, merged with another company, or been acquired by another company, evaluate the strategy that led to the merger or acquisition to determine whether or not this merger or acquisition was a wise choice. Justify your opinion.

* For the corporation that has acquired another company, merged with another company, or been acquired by another company, evaluate the strategy that led to the merger or acquisition to determine whether or not this merger or acquisition was a wise choice. Justify your opinion.

Analysts estimate that the $80 million in cost saving could be realized after the acquisition , however certain other costs associated with the integration approximately $130 million would occur .Hence, I take these cost savings and integration costs into consideration for the with-synergies valuation. Incorporating the effects of 80million cost savings for the merged firm (to be achieved by end of 2007 and assumed to incur in perpetuity then on) and 130 million integration costs (half of this accounted at the beginning years) in the estimated EBITs for Torrington, a new horizon value is estimated, the new FCF is discounted by acquiring company’s WACC 8.39%. Torrington company’s with- synergies valuation $1386.38 million exceeds the value as a stand-alone entity by approximately $286 million. sheet2: With-synergies Valuation of Torrington-DCF Method.

In Table 1 these assumptions are used to find the present value of the additional cash flows as well as the present value of the tax shield. From this merger approximately $36.24 would be added in value per share this results in a value of $107.24 per share. We recommend that CSX does not offer more than $95 per share. This will ensure that CSX does not overpay for the acquisition and will create a positive NPV even if they do not realize all of the potential synergies.

The choice is exercised by making an election by filing a prescribed form with the Internal Revenue Service (“Service” or “IRS”). If the election is made, the acquired subsidiary secures a step-up (or step-down) in the basis of the assets. In effect, for the selling shareholder it is still a sale of stock; while for the purchaser it is in essence an acquisition of assets. Since the deemed sale is regarded only for federal income tax purposes, and not for other federal and state laws, the ownership of assets and contracts remains intact, thereby avoiding the complications of an actual assets transfer.

Chapter 7: Merger and Acquisition Strategy --- The Acquisition and Restructuring of Kia Motors by Hyundai Motors (written by Seungwha Chung and Sunju Park)

McKesson was founded in 1833 by John McKesson and Charles Olcott, when organized health care was just getting started in America. They started in New York City importing and wholesaling therapeutic drugs and chemicals. The young company imported drugs from Europe aboard trade ships along with medicinal herbs, spices and roots. In 1853 an employee, Daniel Robbins, became a partner in the firm and it was renamed McKesson and Robbins. McKesson and Robbins utilized covered wagons to distribute their pharmaceuticals to 17 states and territories from Vermont to California.

Summit Partners proposes to FleetCor Technologies (later preferred as “FleetCor” or the “Company”) an investment into FleetCor for the total amount of $44.9 million in return for a post transaction ownership of 54.2% in the “Company” and coming down to 46% ownership in the company after newly created stock options for management equivalent to 15% ownership in the company has been completely executed and fully diluted. This investment is in the form of convertible preferred stock with an 8% accrued interest, compounding annually. As the transaction come through, Summit’s prefer stock will be treated equal-footing in

A merger is the joining of two or more companies with the intention to achieve higher levels of productivity and efficiency. As well as this, mergers bring two existing companies and make them one. Daimler-Benz is German company in the automobile sector with operation in over 21 countries creating automobiles, vehicles, and engines. Daimler-Benz is a business that had strong financial foundations with most of their income coming from their operations within the luxury cars market. However, due to a lot of competition within the market they required diversification within its product range and so believed that the merger with Chrysler would help them do this. In the 1980s after the oil crisis as well as the increasing ecological movement, they came up with a new vision, which was “Integrated Technology Corporation” and as a result purchased lots of different companies including AEG, Telefunken, MTU, Dornier, Fokker, and MBB. Apart from this, they co-developed the smart car with Swiss, which helped them aim at lower volume segments. (Kohler, 2009, pg. 310)

For a tax-free reorganization to be possible, two requirements must be met. First, at least 40% of the total consideration paid to Shareholders must be stock of the Acquirer. In other words, the nonstock consideration (“boot”) cannot exceed 60% of the total consideration. If the boot exceeds 60%, there cannot be a tax-free reorganization. However, a similar result may be possible under a 351 merger .

When one company acquires another one, the operations, policies, and practices need to be changed. In the case of multiple business segments with separate postretirement plans and the intention to eliminate each, many factors must be considered in relation to accounting reporting requirements. More specifically, the reporting for defined contribution, defined benefit, and other postretirement plans must be researched and the proper procedure to eliminate the two newly acquired segments must be understood.

At the time of the actual merger in 1997, the managers of both Suez and Lyonnaise saw different advantages in terms of major synergies, considering the current situation in their business sectors and their long-term strategic goals. Some of their arguments were:

In order to make their preferred stock more attractive to potential investors, corporations offer a variety of features in their preferred stock. These characteristics may vary every issue of the stock and include the combination of two or more features. The special aspects of preferred shares are recorded in a document called an indenture.

As we can see on attached charts - Market was not too sure about this merger (“On paper, the deal has much to commend it, many outsiders say”. But thorny issues remain, including how to accommodate the strains between consultants and auditors, potential conflicts of interest involving important clients and even the delicate matter of choosing a new name. If the negotiators are not careful, fallout could haunt the combined firm for years to come.) From the time when merger plans were made public Shares of