Unit 12
Global M&A
Exercises氘气
1.Answer the questions on the text.
1)What does the author expect M&A activity to be in 2011?
The author expects that M&A activity will continue to growth in number and strength with the global economic recovery and the improvement of financial and credit market conditions.
2)What must companies also consider about M&A besides favorable factors
like abundant cash and improving economic conditions?
Companies must also consider the recent opposition to certain M&A deals by activists and some shareholders and their preference to other strategies.
3)What do you think unsolicited transactions, hostile acquisitions and deal
jumpings are in common?
Passivity on the target company and out of its expectation.
4)What may further encourage unsolicited transactions?
Recent success of hostile acquirers in forcing target companies to negotiate and accept deals though occasionally taking a long time.
5)What are the features and trends of private equity firms?
They are seeking an exit from portfolio companies and are seeing M&A as an increasingly attractive alternative to capital market transactions.
6)What is an tender offer?
It is a public, open offer or invitation by a prospective acquirer to all stockholders of a publicly traded corporation (the target corporation) to purchase some or all of their shares. The price offered is usually at a premium to the market price. In a tender offer, the bidder contacts shareholders directly; so the directors of the company may or may not have endorsed the tender offer proposal.
7)What are the key deal issues in M&A transactions?
(1)reverse break-up fees
(2)caps on damages payable by acquirers failing to close
(3)the availability of specific performance remedies to compel a party to
complete an acquisition
8)How do US and UK takeover systems differ?
In US takeover system, state case law allows target boards to take defensive measures within certain limits.
In order to correct the perceived imbalance, UK disallows deal protection mechanisms; sets a default period in which a bidder will have to either announce
a fully financed bid or walk away; and implements other measures to enhance
bid-related disclosure.
山野的呼唤
9)What are the views on the burden of extending bids into the U.S?
(1)Some of both European regulators and bidders fear that the extension of paper
bids into the US may be too burdensome and the exposure to the US plaintiffs’ bar and US courts may be too uncertain and risky.
(2)But the case of Morrison v. NBA may have changed European regulators and
bidders view because the pending anti-fraud-based actions against non-US companies were either dismissed or the damages to companies ere greatly reduced
(3)The convergence between European and US securities regulations have
produced positive effects, may further alleviate such concerns, and would encourage M&A players to consider using more shares in cross-border deals.
10)How is M&A in emerging market expected to develop in 2011?
(1)It is expected to grow over one-third in 2011, taking a larger share of global
M&A activity, particularly true in BRIC nations.
(2)Sovereign wealth funds abundant in funds will continue to play a key role in
inbound M&As and, meanwhile, private equity is to be much more important source of funds for M&A activities there.
(3)Companies from emerging markets will engage in more outbound M&A deals
for natural resources and market growth as well as inbound ones.
(4)Multinationals from the developed countries may also go on M&A activities
sr2min emerging markets either for market footholds or growth opportunities. 11) What is said about US M&A deal enforcement?
(1) The official agencies FTC and DOJ have continued to pledge vigorous
merger enforcement and have dedicated significant resources to updating the
merger review process.
(2) They have also proposed changes to pre-merger notification form.
(3) The Antitrust Division has enhanced enforcement in vertical mergers as well
as horizontal mergers.
12) What are the trends of EU antitrust enforcement?
DG COMP and its Chief Economist team are paying close attention to the US-led debate over the need to define markets
DG COMP has increased its reliance on the counterfactual analyses for judging whether a merger prevents effective competition.
2.Fill in each blank in the following sentences with one of the phrases in the list
given below. Make changes when necessary.
1)BRIC nations would support the country in the areas of education, health and
agriculture, among others.
2)In the second quarter we successfully secured a non-dilutive source of growth
capital on very favorable terms sufficient to drive both near and longer-term initiatives.
3)We seem to value time in cyclical phases and seasons rather than in minutes and
hours.
4)The world is facing far more challenges than before in the context of intensified
globalization.
5)In the debate Team A seemed to get upper hand at the beginning but quickly lost
strength.
6)He would discuss with the officials of Bulgaria various topics such as investment
climate, the fight against corruption, and its accession to the European Union. 7)We are urging local education and city leaders to ramp up the pressure on their
governments to cough up more cash for new schools in their areas.
8)Potential mayoral candidates are already flush with funds from their supporter
for the coming election.
9)The government has been urged to follow through on its pledge to reform the
current wage system.
10)The birth of a new nation in Sudan may give rise to numerous thorny issues,
including sharing of resources.
3.Match the terms in column A with the definitions in column B.
A____________________ B__________________________________________ 1) equity market A) An asset class consisting of equity securities for
operating companies that are not publicly traded on a
stock exchange, including venture capital, growth
capital and mezzanine capital. 5
2) antitrust agency B) The market, also known as stock market, where
shares are issued and traded, either through exchanges
or over-the-counter markets. 1
3) synergy C) A merger occurring between companies producing
the same or similar products or offering similar
services. 8
4) due diligence D) An organization responsible for prohibiting
practices that restrain competition, including
price-fixing conspiracies and acts designed to
achieve monopoly power. 2
5) private equity E) A company in which a venture capital firm, buyout
firm, holding company, or other investment funds
invests. 10
6) vertical merger F) A market in which individuals and institutions
trade financial securities in order to raise funds. 9 7) tender offer G) Additional effectiveness achieved from mutually
advantageous integration or compatibility of efforts
or resources between business participants. 3
8) horizontal merger H) An investigation of a business prior to signing a
contract, for example, a potential acquirer evaluating
a target company or its assets for acquisition. 4
9) capital market I) A public, open offer by a prospective acquirer to a
publicly traded corporation to tender its stock for
sale at a specified price during a specified time. 7
10) portfolio company L) A merger between two companies producing
different goods or components for the final
finished product, for example, a car manufacturer
merging a tire company. 6
4.Translate the following passage into Chinese.
去年，由于全球兼并业务突破了网络泡沫时代的惊人水平，市场又跟1999年那样派对聚会。从事兼并交易的银行家和律师为派对后遗症做了充分的准备。但派对上随着音乐响起，众宾客开怀畅饮，舞场跳舞通宵达旦。今年到目前为止已公布的兼并交易就已达两万亿美元，这甚至可能超过对华尔街最乐观的预测。 中国海军护航11年
这个星期我们又经历了一次强劲的兼并飙升。当争夺荷兰银行控制权的战役出现新拐点时，美国铝业老大美铝公司则要恶意收购其对手加拿大铝业公司。在鲁伯特·默多克以50亿美元主动竞购道琼斯后，汤姆逊确定出价88亿英镑（175亿美元）收购新闻网和金融信息业务领域的竞争对手路透社。还有各种谣言纷传必和必拓公司可能要兼并其最大的竞争对手力拓矿业集团以图创建世界最大的采矿公司。 这样大胆的突袭是由高歌猛进的股市引起的。道琼斯工业股最近以超常的频率达到新高，中国股市交易额则在不断刷新。所以现在处于一种狂热状态，甚至连收购者都看到他们的股价在猛涨。美铝公司的股价在它提出收购要约的当天就涨了8%。最有甚者，巴菲特，他通常不是个随大流的人，说如有合适的收购对象将拿出高达600亿美元的钱，比任何投资者在单项兼并案中勉强所投的钱要多得多。
跟九十年代由股市支撑起来的兼并热不同，目前的兼并风潮是靠信贷的。由于利率低，企业以债务融资比通过股权容易，这一趋势正好给了大型私募股权公司一个可乘之机，按价值计算它们主导了所有兼并的五分之一。它们仍有大量的兼并款项要化出去（最大的基金接近200亿美元的规模），而且正在以前所未有的速度进行投资。由于有那么多的资金在手，它们变得越来越大胆。平均的买断价格已上涨了三倍，达13亿美元。除此外，这一兼并潮从产业和地理上看更为宽泛，也没有哪个产业远远超出其他产业，金融服务、五金矿产、还有消费品领域都充满着兴奋情绪。九十年代的兼并交易主要集中在美国，而这次则分布的更为均匀。四月份欧洲的兼并交易资金是美国的两倍。
5.Reading the following text and choose the best sentence from the list A-E
below to fill in each of the gaps in the text.
1)DaimlerChrysler stood tall as the worst example of a bad marriage.
2)The brand hasn’t been a real moneymaker for a very long time.
3)That would indicate that Volvo will keep its Swedish heritage and cachet.
4)The Chinese luxury market is booming and still has room for some other players
to come in and build a brand.
5)It need to rely on Ford and the Swedes for technology that will make the Chinese
cars real Volvos.
Supplementary Reading
Overcoming Merger Risks
1)Despite rather low rate of success, many companies will ________.
A.fulfill their ROI expectations in 2011
B.choose M&A as the best way to growth in 2011 ∨
C.attempt to mitigate merger risks in 2011
D.stay focused on production expansion in 2011
2)According to the author, what kind of deal is more likely to succeed as far as deal
size and type are concerned?
A. A big-bucks merger.
B. A hostile merger.
C. A smaller company swallowing a big and unwilling one.
D. A larger company purchasing a ready and willing smaller one. ∨
3)All of the following are reasons for executives’resistance to early integration
planning EXCEPT ________.
A.anti-trust laws in the developed world
B.the fear of “gun-jumping”
三里庵派出所
D.acting as one entity before close
4)What is the critical factor that often determines the level of merger integration?
A.The cultural similarities and differences.
B.The synergies between the intangibles. ∨
C.Management styles and corporate values.
D.Decision making mechanisms
5)It’s too early to say that ________ at the close of the deal.
A.the formal integration period comes to an end ∨
B.culture has great influence on corporate mergers
C.potential impediments are removed
D.highly transparent communications are established
6)Why is the merger between Stanley Works and Black & Decker a success story?
A.They had premium products and brands.
B.They were flush with cash for the merger.
C.They complied with the antitrust laws.
D.They kept taking the costs out. ∨
7)In focusing on the value drivers, integrated companies must ________.
A.work together for rapid results
B.capture high-payoff opportunities ∨
< all potential challenges
D.make rapid-results teams work harder
8)The merger intent should do all of the following EXCEPT ________.
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