Merger And Acquisition ( M & A ) Deals

Andrea Winfield considered issuing bonds was not a good option for financing the acquisition. She was particularly concerned about the increasing long-term debt and annual cash layout of $ 6.25 million for 15 years. We believe that her concerns are justified, because the Company had already significant amount of debt that could result in higher risks and stock price

In the last three months of 2008, under the general decline in the global stock market, numerous Asian stock markets were in free fall. The key stock index such as Nikkei 225 in Japan, Hangseng in Hongkong and Sensex in India suffered significant drops. (Rose & Spiegel, 2009)

Major stock market indices globally are trading near the high levels of 2007-2008. Some countries like India have surpassed the previous highs of 2008, and are trading comfortably higher (^BSE, Jan 2008: 20,000 approx.; May 2016: 25,000

In early 2016, the U.S. stock market experienced its worst two week start in history, experiencing what is known as a correction, which is defined as a decline of at least 10% from recent highs. The major factor behind the correction was fear over the Chinese economy. China worried the world economy when its stock market was performing very poorly. In the summer of 2015, it took weeks for world markets to react to China’s market crashing. However, on January 4, 2016, the world felt the effects of China’s crash almost immediately. News from the private index of Chinese manufacturing data

An acquirer is the organization that is purchasing an organization in an acquisition. Usually it has been seen that the stock price of the acquirer drops down while acquiring an organization. The decrease is due to the uncertainty of the transactions and the acquirer would pay usually a premium for the purchase (Berk and DeMarzo, 2007). In the given case study, Fortunis resource limited is the legal acquirer and acquired Mpire Media with an amount of $6 million. The company has fully acquired the company in the 30 April, 2015. An acquirer can charge a monthly or/and transaction fee to the organization to facilitate transactions. However, Fortunis resource limited acquired Tech Mpire Media with the aim of development and success in the coming year.

AT&T has been no stranger to the mergers and acquisitions activity within the telecommunications industry. The company’s most recent purchase has been DIRECTV for about $48.5 billion in both cash and stock. Although the pay-for-television market is moderately developed, this deal enables AT&T to expand and negotiate content agreements with some of the largest media outlets. This transaction also gives the company access to DIRECTV’s 18 million subscribers, which will boost its cash flow potential and generate annual cost savings of $1.5 billion within the next five years. Extra free cash flow is crucial for AT&T at the moment since the company has chosen to heavily invest in its wireless lineup.

The discounted cash flow (DCF) method to valuing a business includes the applications of capital budgeting procedures to an entire firm rather than to a single project. However, differently from common capital budgeting procedures, interest expense is involved in the analysis and deducted in merger cash flow statements. The reason is that the debt related to merger is more complex than issue of new debt related to capital budgeting projects. Acquiring firms often assume that the debt of target is part of the deal. Moreover, the acquisition is often financed partially by

This finance simulation is based on the simulation for the merger & acquisition deal to value the M&A activity that occurs in 2003 between Blackstone and Celanese. This case study is meant to provide the deal details from the point of view of the Blackstone.

Marco Garibaldi was a computer hacker and began to develop computer programs in the basement of his parents’ home. His first software program named as “WordPro” aroused great interest among the academic and the business communities. That was the story behind the establishment of “CompuTech Industries” in 1983. The company went to public in 1990 for the first time. By the end of 1995, CompuTech’s stock price was $25 per share and its outstanding shares were 10,000,000.

The second week of October in 2008 was the worst week for stock market during 75 years, Buckley (2011) state that the worst record was the Dow Jones Industrial Averages dropped 22.1%, but it fell 44.3% then. In general, a financial crisis is not an accident; it may take several years and has complex and interlaced causes (Claessens and Kodres, 2014). The 2007-08 global financial crisis is a typical case due to long-term non-intervention policy and loose regulation for financial market from government. Moreover, it involved the complex relationship between government and financial institutions. In order to look at this issue in particular, this essay first goes though the timeline of the 2007-08 financial crisis, particularly in U.S. and

The inherent business practice of acquiring other , usually competitive, companies is part of a risky but potentially big payout for the risk taker. To understand the true and relative impacts of mergers and acquisitions, it is necessary to examine organizations that both avoid and undertake these types of financial deals. The purpose of this essay is to examine two distinct companies and their business strategies in order to understand the practicality and feasibility of corporate mergers.

Lastly, we have the weighted average cost of capital (WACC). The WACC is the percentage rate that an organization is going to be projected to pay in order to finance all of its assets. Factored into this calculation are the monies owed to its creditors, other providers of capital, and owners. Organizations also use this weighted average in order to see if any of the investments that are available to them are worth pursuing or not. The calculation for the WACC is: . (www.investopedia.com) The WACC is relevant to the M&A process because it helps to determine whether or not the company in question is worth pursuing or not.

Part 2 of this course continues with an overview of the merger and acquisition process, including the valuation process, post merger integration and anti-takeover defenses. The purpose of this course is to give the user a solid understanding of how mergers and acquisitions work. This course deals with advanced concepts in valuation. Therefore, the user should have an understanding of cost of capital, forecasting, and value based management before taking this course. This course is recommended for 2 hours of Continuing Professional Education. In order to receive credit, you will need to pass a multiple choice exam

This case illustrates a leveraged buyout and highlights some of its value-creating aspects. You are invited to combine the valuation principles and methods discussed in the course to evaluate a complex transaction from the perspectives of the various participants. Here are some guidelines for your valuation analysis. • Overview of the Valuation Process. Given the nature of the forecast data, it is useful for valuation purposes to treat the 1980-1984 period differently from the post-1984 period. In fact, the case writer hinted at the possibility of another reorganization at the end of 1984 in

Rational investors are likely to infer a higher firm value from a higher debt level. Thus, these investors are likely to bid up a firm’s stock price after the firm has issued debt in order to buy back equity. We say that investors view debt as a signal of firm value. Moreover, corporations can