ch21 - CHAPTER21 MergersandDivestitures Typesofmergers...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
    21-1 CHAPTER 21 Mergers and Divestitures Types of mergers Merger analysis Role of investment bankers Corporate alliances LBOs, divestitures, and holding  companies
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
    21-2 Why do mergers occur? Synergy:  Value of the whole exceeds sum  of the parts.  Could arise from: Operating economies Financial economies Differential management efficiency Increased market power Taxes (use accumulated losses) Break-up value: Assets would be more  valuable if sold to some other company.
Background image of page 2
    21-3 What are some questionable  reasons for mergers? Diversification Purchase of assets at below  replacement cost Get bigger using debt-financed  mergers to help fight off takeovers
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
    21-4 What is the difference between a  “friendly” and a “hostile” takeover? Friendly merger:  The merger is supported by the  managements of both firms. Hostile merger: Target firm’s management resists the merger. Acquirer must go directly to the target firm’s  stockholders try to get 51% to tender their  shares. Often, mergers that start out hostile end up as  friendly when offer price is raised.
Background image of page 4
    21-5 Reasons why alliances can make  more sense than acquisitions Access to new markets and  technologies Multiple parties share risks and  expenses  Rivals can often work together  harmoniously Antitrust laws can shelter cooperative  R&D activities
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 12/04/2010 for the course BA 201 taught by Professor Jones during the Spring '10 term at Mansfield University of Pennsylvania.

Page1 / 18

ch21 - CHAPTER21 MergersandDivestitures Typesofmergers...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online