you will construct a document that will give the background to a bid, a valuation of the target company, the offer presentation and arguments from the bidder, the defense arguments from the target company, a regulatory appraisal of the bid, and a summation of the chances of the bid succeeding. An important part of the M&A process is selecting attractive merger candidates. Thus, in the first part of your assignment, pretend that you work for the M&A department of an investment bank and you would like to earn a commission on an M&A transaction. Select a potential bidder company and attractive target for that bidder. Your bids will be fictitious, but you should proceed as if they were real bids. To facilitate the valuation process, it is recommended that both companies are based in the UK and publicly listed with financial data.Also keep in mind that a regulatory appraisal will need to be made, so you may wish to choose combinations likely to be reviewed by regulatory authorities. It is OK if you find that what initially looked like attractive merger candidates turned out not to be after closer inspection.1. Introduction: a description of the industry background, recent trends and deals, etc. Discuss how these industry trends contribute to a merger being beneficial between your bidder and target.2. Background on the two companies: give a brief strength, weakness, opportunity, threat (SWOT) analysis. Comment on recent stock market performance by the companies.3. Valuation of target company: using the comparable companies or comparable transactions approach and actual numbers from the companies’ recent balance sheets and financial statements, place a valuation on the target company. Show your calculations in the text or appendix.4. Write a letter from the bidder board of directors to bidder shareholders stating the case in favor of making a bid at the offer price, discussing how much the target is expected to be worth to the bidder once combined with the bidder and how this compares with the offer price and where the enhanced value is expected to come from 5. The offer: write a letter from the bidder board of directors to target shareholders stating the price per share of the target, the form of compensation, and arguments for why it is in target shareholder interests to tender their shares.6. The defense: write a letter from the target board of directors to target shareholders evaluating the offer and giving a recommendation whether the deal is in target shareholders’ interest or not. The evaluation can either be in favor or against the offer. If the evaluation opposes the offer as it stands, explain strategies that will be taken to either hinder the deal or attempt to raise the price.7. Regulatory response: Discuss the following. Would the bid be referred to the competition authorities? Would it be at the national level, at an EU level, by the US authorities, and on what grounds? What are the precedents for a referral, if any? If the bid is referred, what factors would the competition authorities consider, and what judgments would be made on them? What final decision would you expect – would it block the deal outright, allow it to pass, or allow it to pass with concessions. [Suggestion: look at past rulings by anti-trust bodies on mergers similar to your proposed one.]8. In conclusion, a joint evaluation of the bid: does it make sense? What problems does the bid face? What do you think rival companies’ response to the bid might be? Do you think this bid will succeed? Give a justification for your answer. It is here that you might want to discuss any changes in your views about the attractiveness of the combination after having studied it closely.
you will construct a document that will give the background to a bid, a valuation of the target company, the offer presentation and arguments from the bidder, the defense arguments from the target company, a regulatory appraisal of the bid, and a summation of the chances of the bid succeeding.
An important part of the M&A process is selecting attractive merger candidates. Thus, in the first part of your assignment, pretend that you work for the M&A department of an investment bank and you would like to earn a commission on an M&A transaction. Select a potential bidder company and attractive target for that bidder. Your bids will be fictitious, but you should proceed as if they were real bids. To facilitate the valuation process, it is recommended that both companies are based in the UK and publicly listed with financial data.
Also keep in mind that a regulatory appraisal will need to be made, so you may wish to choose combinations likely to be reviewed by regulatory authorities. It is OK if you find that what initially looked like attractive merger candidates turned out not to be after closer inspection.
1. Introduction: a description of the industry background, recent trends and deals, etc. Discuss how these industry trends contribute to a merger being beneficial between your bidder and target.
2. Background on the two companies: give a brief strength, weakness, opportunity, threat (SWOT) analysis. Comment on recent stock market performance by the companies.
3. Valuation of target company:
using the comparable companies or comparable transactions approach and actual numbers from the companies’ recent
4. Write a letter from the bidder board of directors to bidder shareholders stating the case in favor of making a bid at the offer price, discussing how much the target is expected to be worth to the bidder once combined with the bidder and how this compares with the offer price and where the enhanced value is expected to come from
5. The offer: write a letter from the bidder board of directors to target shareholders stating the price per share of the target, the form of compensation, and arguments for why it is in target shareholder interests to tender their shares.
6. The defense: write a letter from the target board of directors to target shareholders evaluating the offer and giving a recommendation whether the deal is in target shareholders’ interest or not. The evaluation can either be in favor or against the offer. If the evaluation opposes the offer as it stands, explain strategies that will be taken to either hinder the deal or attempt to raise the price.
7. Regulatory response: Discuss the following. Would the bid be referred to the competition authorities? Would it be at the national level, at an EU level, by the US authorities, and on what grounds? What are the precedents for a referral, if any? If the bid is referred, what factors would the competition authorities consider, and what judgments would be made on them? What final decision would you expect – would it block the deal outright, allow it to pass, or allow it to pass with concessions. [Suggestion: look at past rulings by anti-trust bodies on mergers similar to your proposed one.]
8. In conclusion, a joint evaluation of the bid: does it make sense? What problems does the bid face? What do you think rival companies’ response to the bid might be? Do you think this bid will succeed? Give a justification for your answer. It is here that you might want to discuss any changes in your views about the attractiveness of the combination after having studied it closely.
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