Computech Company Case Mergers&Acquisitions

Target firm continues to exist, as long as there are dissident stockholders holding out. Successful tender offers ultimately become mergers. No shareholder approval is needed.

Mergers. Acquisitions. Mega-mergers. Recent years in healthcare have witnessed some of the biggest companies acquiring one another at alarming rates. However, the Wall Street Journal released an article at the end of October that has everyone talking - one of the largest owners of drugstores in the United States is considering buying one of the largest health insurers in the United States. That is right, CVS Health might be purchasing Aetna for approximately $66 billion.

In 2010, we acquired certain companies for an aggregate purchase price of $228 million, resulting in goodwill of $111 million and acquired intangible assets of $91 million. The primary reasons for these acquisitions were to expand our customer base and sales channels. The purchase price was allocated to the tangible assets and intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date, with the remaining unallocated purchase price recorded as goodwill. The fair value assigned to identifiable intangible assets acquired was determined primarily by using the income and

Takeover tactics have been used throughout history. Three important tactics are Bidding strategies, Casual pass, and Bear hugs. Bidding strategy is 2/3 successful to the 1st bidder. Bidders have to watch out for not only the target company, but also for other bidders. There has been a higher successrate on bidders who actually contact the target company first in hopes of a more amiable bid. A second bid can be even more successful, therefore the first bidder shouldn’t offer too much to prepare for a comeback bid. This is called Optimal Bidder. Casual pass is an informal overture before bidding . The problem with this is that it gives the target advance warning of the possible takeover. Bearhugs apply pressure to the target before bidding. The acquirer contact the Board of directors and state that they will go to the stockholders and present an offer to them without the Board’s consent. This forces the target to take a public position and puts pressure on the Board because it must consider the offers or they violate fiduciary duties.

Mergers and acquisition plays an important role in survival/vitalization of a corporation in today’s market. It continues to be a breakthrough strategy for improving innovation of a company’s product or services, market share, share price etc.

Notice that a merger analysis consists of two estimating issues which are projected merger cash flows and the appropriate discount rate. Sometimes, estimating cash flows in a merger is a little difficult so that we need to summarize the series of yearly cash flows and inflows. Mr Harry, we need to be aware, although Mr Jack is your friend, he may refuse to provide detailed information about Framingham Flange Factory’s future projections or past history. The second issue is the appropriate discount rate due to an acquisition is an equity transaction; it should be done using a discount rate that reveals the cost of equity

Concepts of business valuation – Critical review of the Discounted Cash Flow (DCF) analysis and its applicability in today’s business world

This project report provides comprehensive information about corporate structures; focusing on friendly and hostile takeovers, introducing them through definitions and some witty examples and finally ending with intriguing discussion and conclusions. Why do companies embrace the idea of merger and acquisition in the first place? Reason is the creation of the value that enables companies to have a competitive

The information below objectives is to offer an understanding of different capital budgeting approaches. The development will contain calculations of the NPV along with other capital budgeting approaches for example the regular payback period, discounted payback period, internal rate of return (IRR), profitability index (PI) and modified internal rate of return (MIRR).? It at that time evaluates whether the assignment ought to be accepted or rejected centered on the level for the standards of the different approaches. Furthermore, it presents the motives why the development would be accepted or rejected. The information finishes with a presentation of advantages and disadvantages of each capital budgeting methodology in a table.

There are a number of competing theories of mergers and acquisitions (M&As) based on the purpose for which such M&As are undertaken. Among these theories are empire building (Baumol, 1967, & Mueller, 1969), establishment of monopolies (Roll, 1986, & Mueller, 1993), management entrenchment (Shleifer & Vishny, 1989), and the attainment of greater efficiencies (Mead, 1968, & Jensen, 1988). These theories are built on the motivations that prompt compa-nies to enter into M&A transactions (Motis, 2007:2). There are instances, however, when target companies do not voluntary agree to a takeover but are compelled by aggressive manoeuvres of the acquiring company. In such

After finished this research project of friendly and hostile takeover cases, I found out that most hostile takeover cases had difficulty in negotiating prices with acquires. New pacific Metals Corp. and Tagish Lake Gold Corp. is a example. After the acquirer offering a fairly high price, they still got strongly rejected from acquiree. By the time the acquiree’s stock price is likely to rise after the announcement of the hostile takeover. I think it is because there was more attractive to investors to hold

Companies use various strategies to gain access to new markets and increase their profitability. Among the strategies are mergers and acquisition, which enable a company to gain synergy, industry visibility as well as economies of scale. Acquisition involves a takeover of one company, the target by another company called the acquirer. The acquired company may cease to exist and the acquirer’s stock continues to be traded. Mergers, on the other hand, involve two companies which are of approximately the same size or resources agree to form a single new company instead of having separate ownerships. Moreover, CEOs may decide to join their companies together for the best interest of both firms to form a merger. However, mergers and acquisitions are dependent on their purchase style, such as hostile or friendly, and how both exercises are announced and received by the stakeholders.

There has been much discussion on the issue of whether can firms achieve growth by the means of acquisition of another firm. Acquisition can be generally defined as “taking possession of an asset by purchase.” (Business Dictionary, 2014) Although some researchers have argued that acquisition can contribute to firm growth, others take a different view that, to some extent, most of the acquisitions fail resulting in over confidence of CEO and the fraud by acquired firm. For instance, Sudarsanam (2003) suggested that successful acquisitions constitute less than 50% of all acquisition. This essay will aim to demonstrate that firms in their majority cannot always achieve growth by the means of acquisition of another firm.

In the past decades, the behaviours of merger and acquisition (M&A) have been active in the worldwide markets. This phenomenon is mostly driven by the desire to leverage synergies to increase stock price and profits, expand market share, and diversify market risk. A firm’s variability of stock return, defined as risks, can be divided into unsystematic and systematic risk (Hillier et al., 2013, 784). While unsystematic risk affects a specific firm or single asset, systematic risk affects a group of assets or businesses (Hillier et al., 2013, 304). Many empirical studies have shown how an M&A announcement influences stock performance in the market by examining abnormal returns, yet returns are related to specific firms

Companies spend a great deal of time and money on new investments. Executives need measures of productivity of capital, which can be applied to distinguish good ones from bad ones. There are broadly two types of measures – some based on accounting income and some based on cash flows. The cash flow based measures can be further categorized as those that consider time value of money and those that don’t. Cash flow based measures that consider time value of money are called Discounted Cash Flow (DCF) techniques.