Lecture_22 - Lecture 22: Merger and Acquisitions: I BD...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
Lecture 22: Merger and Acquisitions: I BD Chapter 26
Background image of page 1

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

View Full DocumentRight Arrow Icon
Topics Overview of Mergers. Overview of Merger Analysis. Illustration of three approaches for constant capital structure.
Background image of page 2
Valid economic reason for mergers Synergy: Value of the whole exceeds sum of the parts. Merger is beneficial to both A’s and B’s stockholders. 2001 merger of Wachovia and First Union. Synergy can arise from five sources. Operating economies: economies of scale, etc. Financial economies: lower transaction costs etc. Tax effects Differential management efficiency Increased market power
Background image of page 3

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

View Full DocumentRight Arrow Icon
Other reasons for mergers Purchase of assets at below replacement cost. Diversification. Beneficial to employees, suppliers, and customers. May not benefit shareholders. Managers’ personal incentives Agency problem causes overinvestment. Managers’ incentives could also deter mergers. Breakup value. Takeover specialist could acquire a firm and sell it off in pieces.
Background image of page 4
Top 10 Global Mergers
Background image of page 5

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

View Full DocumentRight Arrow Icon
Five Merger Waves
Background image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 06/06/2011 for the course FINA 4200 taught by Professor Wu during the Spring '08 term at University of Georgia Athens.

Page1 / 14

Lecture_22 - Lecture 22: Merger and Acquisitions: I BD...

This preview shows document pages 1 - 7. Sign up to view the full document.

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