Corporate Finance, Student Value Edition Plus MyLab Finance with Pearson eText -- Access Card Package (4th Edition)
4th Edition
ISBN: 9780134426792
Author: Jonathan Berk, Peter DeMarzo
Publisher: PEARSON
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Question
Chapter 28.6, Problem 2CC
Summary Introduction
To explain, based on empirical evidence, who gets the value added from a takeover and also give the most likely reasons for such an outcome.
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what is meant by the value of a potential takeover target as an independent firm ? when can a financial analyst can just use the current market valuation as the starting point for the valuation? what cant they? what is the difference between these two valuation, if any?
If you are planning an acquisition that is motivated by trying to acquire expertise, you are basically seeking to gain intellectual capital.
What concerns would you have in structuring the deal and the post-merger integration that would be different from the concerns you would have when buying physical capital?
Discuss the validity of risk diversification as a motivation for companies engaging in merger and acquisition activity?
Chapter 28 Solutions
Corporate Finance, Student Value Edition Plus MyLab Finance with Pearson eText -- Access Card Package (4th Edition)
Ch. 28.1 - Prob. 1CCCh. 28.1 - Prob. 2CCCh. 28.2 - On average, what happens to the target share price...Ch. 28.2 - Prob. 2CCCh. 28.3 - What are the reasons most often cited for a...Ch. 28.3 - Prob. 2CCCh. 28.4 - Prob. 1CCCh. 28.4 - What do risk arbitrageurs do?Ch. 28.5 - Prob. 1CCCh. 28.5 - Prob. 2CC
Ch. 28.6 - Prob. 1CCCh. 28.6 - Prob. 2CCCh. 28 - What are the two primary mechanisms under which...Ch. 28 - Prob. 2PCh. 28 - What are some reasons why a horizontal merger...Ch. 28 - Prob. 4PCh. 28 - Prob. 5PCh. 28 - Prob. 6PCh. 28 - How do the carryforward and carryback provisions...Ch. 28 - Diversification is good for shareholders. So why...Ch. 28 - Your company has earnings per share of 4. It has 1...Ch. 28 - If companies in the same industry as TargetCo...Ch. 28 - Prob. 11PCh. 28 - Prob. 12PCh. 28 - Prob. 13PCh. 28 - Lets reconsider part (b) of Problem 99. The actual...Ch. 28 - ABC has 1 million shares outstanding, each of...Ch. 28 - Prob. 16PCh. 28 - How does a toehold help overcome the free rider...Ch. 28 - Prob. 18P
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Similar questions
- Why might the portfolio effect of a merger provide a higher valuation for the participating firms?arrow_forwardDo mergers create value? If so, who profits from this value?arrow_forwardWhat are the factors that determine whether the company should use cash acquisition or stock acquisition? Discuss five different defensive tactics that the target company can use to thwart this takeover attempt. 3) What are the possible cash flow benefits from this acquisition?arrow_forward
- Discuss the underlying theories and empirical evidence on the value creation from horizontal mergers. How do other firm- and deal- characteristics interact with the valuation effects of such mergers?arrow_forwardWhy so many mergers fail to produce the expected synergistic gains?arrow_forwardWhat options does a company have if its board or management is opposed to an acquisition, a merger, or a takeover?arrow_forward
- Why might a company want to invest in a company rather than buy it outright? Wouldn't they have more say if they bought the company?arrow_forwardDescribe briefly some of the important contributing factors which explain why shareholders of acquiring companies rarely benefit from takeoversarrow_forwardBecause the cost of buying higher market share through acquisition may far exceed its revenue value, what factors should be considered by the company first.arrow_forward
- It is quite often we observe some firms takeover target firms from a different industry. If diversifying harms firm value and it is more efficient to make diversification at the investor (shareholder) level than at the firm level, why do you think the managements still choose to make diversified acquisitions?arrow_forwardWhat is the relevance of Leveraged buyouts (LBOs) to Mergers, Acquisitions and Divestitures?arrow_forwardThe following are sensible motives for mergers EXCEPT: a. Economies of scope b. Reducing firm risk through diversification c. Reducing competition d. Eliminating inefficiencies e. All of the abovearrow_forward
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