1．Part A
There are many different methods to combine the companies in today’s business world. Takeover offers and scheme of arrangement are the two which are popular and be common used in these ways. In this part, it will definition the meaning of takeover offers and scheme of arrangement and lists the difference between them.
A takeover offer refers to an offer from offeror who wants to control the target company with not less than 90 percent of its issued share capital. According to King and Wood Mallesons (2012), a takeover offer is an offer for the entire issued share capital of the Target which could become effective without offeror getting control 100 percent of the target company’s capital. However, the Company Law requires offeror to control no less than 90 percent of target company’s capital and value. Takeover offer is a clear and easy way to complete the company combination.
Scheme of arrangement is more complex for it needs a court procedure. According to Robb and Stephens (2003), a scheme of arrangement is a court approved compromise or arrangement; it is entered into between a company and its creditors or members. It does not need 100 percent of Targets’ issued share capital; it only needs 75 percent members from various classes and the agreement of the High Court together result in obtainment of the Target.
There are several difference between these two method of combination. Firstly, takeover offer is used by bidder or Bidding Company to the target company’s shareholders, scheme of arrangement is used by the target company to its creditors and shareholders. Secondly, from unconditionally aspect, takeover offers need to hold more than 90 percent of value of target’s issued share capital, but scheme of arrangeme...
... middle of paper ...
...ompany, viewed 14 May 2014,
Goedhart, Marc, Koller, Tim & Wessels, David, 2010, The five types of successful acquisitions, Insights & Publications, viewed 14 May 2014,
Laamanen, T. 2007, ‘On the role of acquisition premium in acquisition research’ Volume 28, Issue 13, pages 1359–1369
Mergers and Acquisitions Key Concepts n.d., viewed 14 May 2014,
Robb D and Stephens M 2003 “Schemes of Arrangement” Allens Arthur Robinson
King and Wood Mallesons 2012 “A GUIDE TO TAKEOVERS IN AUSTRALIA” www.kwm.com
Target Statement, 2009, AGL Energy Limited, viewed 14 May 2014,
< http://www.connect4.com.au.ezproxy.lib.uts.edu.au/subscribers/takeovers/987/>
The negotiations were successful! An agreement was reached and I got the job! This success was due in large part to the extensive planning prior to the negotiation with Robust Routers. Planning is critical to a successful outcome when negotiating (Lewicki, Saunders & Barry, 2011). This was especially true in negotiating this job offer as the bargaining mix included items as varied as state of residence, salary and even stock options. Also of great benefit was that both sides realized that the while the outcome was important the relationship would be protected and even strengthened as a result of our collaborative negotiation (Lewicki, Saunders & Barry, 2011).
In the year of 2005, the companies eventually found a way to make it easier for the companies to combine without having any major issues or problems. Unfortunately, around the year of 20010 the merging com...
fail (Cheng, 2012). Mergers and acquisitions are much common in these days and only a few of them are end up in successes. Even though mergers and acquisitions are not result much successes rate, many organizations are still preferring it because, it is used as a cooperative strategy but nowadays it is used for cooperative development. The cultural differences and merger integration can be considered as an important factor for the failure rate but this study mainly focused
The second section will be a report to the board of directors that identifies a synergistic acquisition candidate for Target. This section will identify Target's proposed acquisition terms, price, financing, and potential negotiation strategies. This segment will also include price / earnings ratios, book value, current market value, and liquidation based on the supporting financial data. Also in this part will be a discussion of the general and specific risks inherent in an acquisition strategy.
Purchasing Research – Purchasing research may be costly, but the knowledge and insight it will provide is paramount. While Larry could surely conduct his own secondary data research for less than $15,000, a busy schedule and time constrain him. See research purchased in Q3.
Eckbo and Masulis (1992) open their paper by explaining the decline in rights issues and the surge in firm commitments. To show this Eckbo and Masulis use a sample of 1,249 equity offers between 1963-1981.
Gaughan, P. A., 2002. Mergers, Acquisitions, and Corporate restructuring. 3rd ed.New York: John Wiley & Sons, Inc.
Conglomerate mergers result in joining of firms which compete in different product markets, and which are situated at different production stages of the same or similar products. That is to say, neither the products nor the inputs of these merging firms are the same. Conglomerate mergers result in significant advantages gained by the merging firms since they are the fastest means of entry into different activity fields in the shortest possible time span. Moreover, they reduce the financial risks by “not putting all the eggs in one basket” (Gaughan, 2007). There are three types of conglomerate mergers:
...dditionally, the merger can take place in smaller phases. For instance the first phase may include change of the physical look of the branches and the signage - – so as to convey a consistent view and experience for its customers. This phase may also include effective communication to the employees to educate them about the merger, ensure them of their positions and encourage them to participate in the merger. Second, the firm can totally combine the bank’s technology and the information systems which will allow the merged firm to operate as a single entity and to become fully operational. The management should implement the merger with care and prudence, aiming for minimal disruption for the customers and should communicate extensively to ensure all its stakeholders are kept fully informed as they make changes.
Jharkharia, S. (2012). Supply chain issues in mergers and acquisitions: A case from Indian aviation industry. International Journal of Aviation Management,1(4), 293-303.
The company has diversified so much that it has lost its core competency. Also, the acquired businesses are irrelevant in nature. The tool business needs a ‘Business to Business’ type of marketing. However, some of the firms are ‘Business to Consumer’ (e.g. Bakery Business, Dry cleaning store chain) and ‘Business to Government’ (e.g. Firm engaged in Defence research work) as well. So, lack of integration of the business is one of the key issues we need to address.
Acquisition analysis includes determining consideration transferred, goodwill (or gain on bargain) and fair value of assets at the date of acquisition. When Woolly Ltd purchased Jumper Ltd; they paid more then the consideration transferred (fair value of assets less liabilities) of the entity, thus there was goodwill provided. Business combination valuation entries occur when assets or liabilities fair value differs from their carrying amount at the date of acquisition. As Jumper Ltd had assets with a higher fair value than carrying amount; there was reasoning for BCVR entries. Intragroup transactions come about through the transferal of assets or liabilities such as inventory or dividends from the subsidiary to the parent or visa versa (within the group). When Woolly Ltd and Jumper Ltd conduct intragroup transactions, as separate legal entities these transactions are recorded as normal however, from the point of the group these transactions are internal and therefore are not recognized by external users, thus the transactions must be eliminated. Finally, non-controlling interest occurs when the parent owns less than 100% of the subsidiary, however this is not relevant to Woolly Ltd as ownership of Jumper Ltd is 100%. These steps are
The first two do not require the acquired business unit to be connected with the existing units; the second two depend on connection. Although the concepts are not always mutually exclusive, the way in which they generate value for the corporation is different for each. The portfolio management balances current business activities with new industry acquisitions. Its success is undervalued acquisition meets attractiveness and COE test. The challenges are: increased capital market competition, need for industry specific knowledge, and growth of the company and diversity. The restructuring seeks underdeveloped or sick companies and industries. Its successes are: utilize and pass the three tests and ability to find undervalued companies with growth potential. Its challenges are: restructurer exposed to more risk, time limit for success, hold onto a restructured company, and growing depletion of restructuring pool with increased competition. The transfer of skills involves activities important to competitive advantage. With transferring skills, business activities are similar enough that sharing knowledge would be meaningful. However, skills must be useful to key business activities and must be beyond competitors’ capabilities. The ability to share activities has been a potent basis for corporate strategy because sharing often enhances
Zejan, M. (1990). New ventures or acquisitions: The choice of Swedish multinational enterprise. Journal of Industrial economics, 38(3), 349-355.
When entrepreneurs plan their business future they will consider how they can increase their business size or profit in a short period. Entrepreneurs may consider growing their business or company by using a merger or an acquisition. These methods can be a speed up tool and a short cut to enlarge their business. (Burns, 2011) Also they can reduce competition, make it easier for entrepreneurs to think about the market and product development and risk reduction. Furthermore, some lesser – known companies can improve their firm’s image and market power by using merger and acquisition with larger firms. However, there may be risks associated with merger and acquisition related to lack of finance and time. (Burns, 2011) This essay will discuss more deeply the advantages and disadvantages of using mergers and acquisitions, showing how it can affect firms and market with the case study.