某某公司企业承购.pptx

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1、Megers&AcquisitionsThree Areas of Study1.Determining if a Merger creates value(then developing an offer price)2.Evaluating M&A offers in the market place(your case analysis assignment)3.M&A Strategies(biggest area of“talk”)Megers&AcquisitionsThree Areas of Study1.Determining if a Merger creates valu

2、e(then developing an offer price)2.Evaluating M&A offers in the market place(your case analysis assignment)3.M&A Strategies(biggest area of“talk”)Today-Cover bothPart 1&3 via lecturePart 2 via example 1997 and 1998 MergersSensible Reasons for MergersEconomies of ScaleA larger firm may be able to red

3、uce its per unit cost by using excess capacity or spreading fixed costs across more units.$Reduces costsSensible Reasons for MergersEconomies of Vertical IntegrationControl over suppliers“may”reduce costs.Over integration can cause the opposite effect.Sensible Reasons for MergersEconomies of Vertica

4、l IntegrationControl over suppliers“may”reduce costs.Over integration can cause the opposite effect.Pre-integration(less efficient)CompanySSSSSSSSensible Reasons for MergersEconomies of Vertical IntegrationControl over suppliers“may”reduce costs.Over integration can cause the opposite effect.Pre-int

5、egration(less efficient)CompanySSSSSSSPost-integration(more efficient)CompanySSensible Reasons for MergersCombining Complementary ResourcesMerging may results in each firm filling in the“missing pieces”of their firm with pieces from the other firm.Firm AFirm BSensible Reasons for MergersCombining Co

6、mplementary ResourcesMerging may results in each firm filling in the“missing pieces”of their firm with pieces from the other firm.Firm AFirm BSensible Reasons for MergersMergers as a Use for Surplus FundsIf your firm is in a mature industry with few,if any,positive NPV projects available,acquisition

7、 may be the best use of your funds.Dubious Reasons for MergersDiversificationInvestors should not pay a premium for diversification since they can do it themselves.M&AQ:Does M&A create Value?A:if PVAB PVA +PVBQ:If M&A creates value,Why?A:Synergies -Admin -Dup services -lower COCM&AQ:Does M&A create

8、Value?A:if PVAB PVA +PVBQ:If M&A creates value,Why?A:SynergiesTricks -Admin-excuse to change D/E -Dup services-diversification -lower COCM&AQ:How Much Should A Firm Pay in a M&A?M&AQ:How Much Should A Firm Pay in a M&A?A:Theory Gain=PVAB-(PVA +PVB)A must pay B part of the gainM&AQ:How Much Should A

9、Firm Pay in a M&A?A:Theory Gain=PVAB-(PVA +PVB)A must pay B part of the gainA:Reality A usually pays B all of the gain,plus more.Why?M&AQ:How Much Should A Firm Pay in a M&A?A:Theory Gain=PVAB-(PVA +PVB)A must pay B part of the gainA:Reality A usually pays B all of the gain,plus more.Why?Premium Pai

10、d by A=(Cash-MVB)+(MVB-PVB)M&AType of TakeoversHostileFriendlyLBOGoing PrivateGreenmailWhite KnightTakeover DefensesWhite Knight-Friendly potential acquirer sought by a target company threatened by an unwelcome suitor.Shark Repellent-Amendments to a company charter made to forestall takeover attempt

11、s.Poison Pill-Measure taken by a target firm to avoid acquisition;for example,the right for existing shareholders to buy additional shares at an attractive price if a bidder acquires a large holding.M&AWho Usually Benefits from M&A?Shareholders of BLawyers&BrokersExecs in AWho Usually Losses in M&A?

12、Sharehpolders of A(overhead)Execs in BEmployeesM&A AnalysisSteps for M&A Market AnalysisSteps for M&A Market AnalysisBriefly describe the financial&stretegic history of the companyDetermine pre-announcement valueDescribe M&A offerDetermine merged value(examine synergies)Compare values,offer,&market

13、pricesPredict success of M&ARecommend a strategy for investors and shareholdersProvide a summary analysisDisney/Cap Cities DealHistory-News,Annual Report,10k,etc.(Library&My Web page)(use spreadsheets to present financial facts)(include appendix with actual copies of info)(reference your sources)(pr

14、esent both original&typed summary data)(remember to annualize data)Announcement of OfferDisney offers to acquire Cap Cities/ABC.Disney will exchange each share of Cap Cities for one share of Disney plus$65 cash.Disney will issue$10bil in new debt to finance the deal.Disney/Cap Cities DealFact SheetF

15、orecasted N.E.14%growth rateForecasted N.E.EPSx#New Shares*DisneyMarketRd7.25%8.0%EPS$2.50$2.33 EPSre-gDiscount RatesDiscount Rates DisneyCC/ABCNew Firmra22.97%(M&M)rd7.25%(given by market)re24.53%(given by perpetuity formula)Sh Pr=solve for reDisney/Cap Cities Deal rA=rd(1-Tc)(D)+re(E)(V)(V)rd=give

16、n DisneyCC/ABCNew Firmra22.97%18.92%rd7.25%7.25%re24.53%19.31%EPSre-gDiscount RatesDiscount RatesSh Pr=solve for reDisney/Cap Cities Deal rA=rd(1-Tc)(D)+re(E)(V)(V)rd=given DisneyCC/ABCNew Firmra22.97%18.92%rd7.25%7.25%re24.53%19.31%EPSre-gDiscount RatesDiscount RatesSh Pr=solve for reDisney/Cap Cit

17、ies Deal rA=rd(1-Tc)(D)+re(E)(V)(V)rd=given DisneyCC/ABCNew Firmra22.97%18.92%14.80%rd7.25%7.25%8.00%re24.53%19.31%17.97%MarketTheory Disney DisneyCC/ABCCC/ABCNew FirmNew Firm New Firm New FirmVL32.40 bil15.30 bil52.60 bilNOIUg20%14%rEU VUDisney/Cap Cities DealDerive data for the unlevered firm&Calc

18、ulate the Theoretical New Firm ValuesGOALValue of the Firm(M&M)Value of the Firm(M&M)VL=NOIu rEU-g+(Tax rate)debtDisney/Cap Cities Deal NOIu =EPSU x#of sharesorNOIu =(EPSL x#of sh)+(debt)(rD)(1-Tax Rate)Solve for rEUVUDisney/Cap Cities DealNOIu =(EPSL x#of sh)+(debt)(rD)(1-Tax Rate)DisneyNOIu =(2.60

19、 x.520)+(2.6)(.0725)(1-.34)=$1.47 bilCC/ABCNOIu =(5.10 x.154)+(.5)(.0725)(1-.34)=$.81 bilNew FirmNOIu =(2.33x.674)+(13.1)(.08)(1-.34)=$2.26 bilVL=NOIu rEU-g+(Tax rate)debtDisney/Cap Cities DealDisneyVL=1.47 rEU-.20+(.34)2.6Solve for rEUrEU=24.68%VU=1.47 .2468-.20=$31.41 bilVL=NOIu rEU-g+(Tax rate)de

20、btDisney/Cap Cities DealCC/ABCVL=0.81 rEU-.14+(.34)0.5Solve for rEUrEU=19.35%VU=0.81 .1935-.14=$15.14 bilVL=NOIu rEU-g+(Tax rate)debtDisney/Cap Cities DealNew Firm(market)VL=2.26 rEU-.1787+(.34)13.1Solve for rEUrEU=22.58%VU=2.26 .2258-.1787=$47.98 bil MarketTheory Disney DisneyCC/ABCCC/ABCNew FirmNe

21、w Firm New Firm New FirmVL32.40 bil15.30 bil52.60 bilNOIU1.47 bil0.81 bil2.26 bil 2.26 bilg20%14%17.87%-Avg based on NOIUrEU 24.68%19.35%22.58%VU31.41 bil15.14 bil47.98 bilDisney/Cap Cities DealNew Firm(Theory)rEU=Weighted Avg of Disney&CC/ABC rEUrEU=24.68 x (31.41 )+19.35 x (15.14)(31.41+15.14)(31.

22、41+15.14)rEU=22.92%Disney/Cap Cities DealNew Firm(Theory)rEU=Weighted Avg of Disney&CC/ABC rEUrEU=24.68 x (31.41 )+19.35 x (15.14)(31.41+15.14)(31.41+15.14)rEU=22.92%g=Weighted Avg of Disney&CC/ABC gg=20 x (31.41 )+14 x (15.14)(31.41+15.14)(31.41+15.14)g=18.02%Disney/Cap Cities Deal MarketTheory Dis

23、ney DisneyCC/ABCCC/ABCNew FirmNew Firm New Firm New FirmVL32.40 bil15.30 bil52.60 bilNOIU1.47 bil0.81 bil2.26 bil 2.26 bilg20%14%17.87%18.02%rEU 24.68%19.35%22.58%22.92%VU31.41 bil15.14 bil47.98 bilDisney/Cap Cities DealNew Firm(Theory)Disney/Cap Cities DealVL=NOIu rEU-g+(Tax rate)debtVL=2.26.2292-.

24、1802+(.34)13.1VU=46.12 bilVL=$50.58 bilDisney/Cap Cities Deal MarketTheory Disney DisneyCC/ABCCC/ABCNew FirmNew Firm New Firm New FirmVL32.40 bil15.30 bil52.60 bil50.58 bilNOIU1.47 bil0.81 bil2.26 bil 2.26 bilg20%14%17.87%18.02%rEU 24.68%19.35%22.58%22.92%VU31.41 bil15.14 bil47.98 bil46.12 bilDisney

25、/Cap Cities DealNew Firm(Theory)VL=50.58Debt Value=13.1Equity value =50.58-13.1 =$37.48 bil Price per Share=37.48/.674 =$55.60Disney/Cap Cities DealComparative Equity Values($bil)Comparative Equity Values($bil)DisneyCC/ABCNew FirmMarket(pre)$29.8$14.8Market(post)M&M(pre)$29.8$14.8 M&M(post)Disney/Ca

26、p Cities DealComparative Equity Values($bil)Comparative Equity Values($bil)DisneyCC/ABCNew FirmMarket(pre)$29.8$14.8Market(post)$39.51M&M(pre)$29.8$14.8M&M(post)$37.48 Disney/Cap Cities DealComparative Equity Values($sh pr)Comparative Equity Values($sh pr)DisneyCC/ABCNew FirmMarket(pre)$57.63$96.13M

27、arket(post)$58.63M&M(pre)$57.63$96.13 M&M(post)$55.60 Predicted Success of OfferCap Cities Market Price=116 1/4 Cap Cities Offer=123 5/8=(58 5/8+65)Offer will succeed Disney/Cap Cities DealPredicted Success of OfferCap Cities Market Price=116 1/4 Cap Cities Offer=123 5/8=(58 5/8+65)Offer will succee

28、d Cap Cities Market Price=116 1/4(Theory)Value of Offer=120.60=(55.60+65)Offer should succeedDisney/Cap Cities DealAnalysis SummaryThe market is accurately valuing the offer to Cap Cities/ABC at around 116(123 is too high)While both firms were properly valued prior to the offer,Disney is now overval

29、uedCap Cities stockholders should take the offer and cash out at the inflated market valueDisney stock holders should sell at the inflated priceThe market is over reacting to Disneys offer by pushing up Disneys stock price.The primary cause is probably an inflated opinion of Disneys growth opportunitiesDisney/Cap Cities Deal