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25735 Mergers and Acquisitions

01 / 10 / 2021 Assignment

This paper circulates around the core theme of 25735 Mergers and Acquisitions together with its essential aspects. It has been reviewed and purchased by the majority of students thus, this paper is rated 4.8 out of 5 points by the students. In addition to this, the price of this paper commences from £ 99. To get this paper written from the scratch, order this assignment now. 100% confidential, 100% plagiarism-free.

A. Deal Rationale [30 marks]
A series of slides will justify the deal concept and explain the logic of the deal. These slides will address the following points:
 Overview of Woolworths’ industry, business, its strategy and its merger strategy
 Target company’s industry analysis using the factors (five forces and others) discussed in the lecture slides
 Target company’s company analysis using the guideline in the lecture slides: this will involve both qualitative and quantitative analysis
 Comparison of the target company with peers (appendices)
 Target’s segment analysis (appendices)
 Target’s Management and Management quality
 Target company’s strategy analysis and its merger strategy analysis
 Deal Rationale
o You need to bring together the analyses in the preceding points and other deal motivations to fully justify the choice of the target and the sources of synergy and value creation
o This slide will include qualitative discussion of the sources of synergies and value creation and well as why the deal makes sense in a long-term or “strategic” sense
B. Valuation [30 marks]
A series of slides will value the target company by itself (stand-alone valuation), and separately value the potential synergies from the acquisition:
 DCF Assumptions: you should state the assumptions in one slide in the “presentation” section and explain these assumptions in another slide in the “appendices”. The assumptions will include your forecasts about revenue growth, profit margin etc.
 Stand-alone DCF analysis of the target (in appendices): follow the standard DCF method
 DCF sensitivity analysis and DCF scenario analysis
 Comparable valuation using comparable listed companies
 Comparable valuation using comparable precedent transactions: use Connect4 database from UTS Library to get the relevant data/information
 Overall standalone valuation and sensitivities/scenarios based on the three above valuation methods: these should be summarised in terms of valuation ranges in the “presentation” section with supporting tables in the “appendices” section
o Use a valuation football field (e.g., Exhibit 3.60 in Rosenbaum and Pearl) in the “presentation” section
 Sources of synergies --- provide quantitative details on the sources of synergy and value creation.
o You should have a separate slide that addresses this issue and explains each of the sources and your assumptions regarding this in some detail
25735 Mergers & Acquisitions
 Synergy valuation and sensitivities/scenarios
o You need to identify specific sources of synergies and forecast the expected synergy cash flows:
o What are the magnitudes of the synergies?
o How long will the synergies last?
o You should value the synergies using the DCF method
C. Deal Structure and Other Analyses (30 marks)
The first four points in the following list should inform you recommendations on the following points.
 Target company’s annotated share price over the last 52 weeks
 Target’s ownership structure summary – this might have potential effect on bidding strategy
 Acquisition risks: identify potential risks such as:
o Asset/accounting quality, integration issues and
o Potential regulatory concerns: ACCC, industry specific regulation etc.
 Control premium: Recommended bid price and upper and lower bound
o The recommendation for the control premium should be based on the valuation of the target and the potential synergies
o You also need to consider the factors that affect control premium as discussed in the lecture (e.g., target’s recent price history)
 Payment method: Cash, stock or mixed (for stock and mixed, how many shares do you propose to issue and what is the cash equivalent of those shares --- synergy should be included in calculating this)
 Bidding strategy: friendly or hostile? You need to provide reasons for the chose strategy
 Method of acquisition: Takeover bid or Scheme of arrangement? Only consider the choice between off-market takeover bid and Scheme of Arrangement bid. Ignore on-market bid, since they are relatively rare
 Funding: How will the deal be financed in the short and long term? What will be potential effect on Woolworths’ capital structure and gearing ratio?
 Term sheet: this should be the first page of your “pitch book” and it should summarise the deal (see the “Pitch Book” example by Robert Bruner)
D. Quality of Presentation (10 marks)
 The slides should be easy to follow (especially, the “appendices” section, which will contain a lot of information)
 The language should be grammatically correct, clear, concise and to-the-point
 Slides should not be overly cluttered, all pages should be numbered and same font should be used throughout, though the font might vary
 You need to illustrate you points with graphs and tables when possible (especially in the “presentation” section)

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