FINA 4050 Capitalism
Netter Spring 2015 Test 1
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Case 1 1/12/2016
Three fundamental questions:
Why do mergers occur?
What are the effects of mergers on value?
How does the merger process unfold?
First case: formation of bank of America. Merger of national bank and bank America in 1998.
o Two qu
M&A quiz 3/31
1. What two investment banks served as financial advisors to the special committee of the
Kinder Morgan BOD? Morgan Stanley and Blackstone
2. Did the special committee and its advisors conduct a formal public auction for Kinder
Morgan? Why o
4 valuation models
o Comparable companies
Based on rations of existing companies in a targets industry
1. Get price/earnings (P/E) ratio of comparable companies
2. Find earnings per shares (EPS) of t
The acquisition of Telecom Italia in 1999
1. What event initiated the takeover process?
Political change: TI privatized in 1997; government sold remaining stake in January
1999, completing the process. The company was also weakened by a massive amo
Lecture 2 1/14/2016
What are the main differences between a merger and a tender offer?
o Similarities: you use them to take over a firm
o Differences: for a merger bidder -> target. Target shareholders have to
approve/vote. For a tend
Lecture 3 1/19/2016
Bank of America corp
Legal: merger. Target shareholders have to vote. Bid shareholders are voting because of a
Nature: friendly. Target board went along with the deal.
Industrial organization: horizontal. It
Pre enlightenment philosophers
We first overview some of the immediate predecessors to
the Classical Enlightenment.
Remember the setting war, conflict, increasing poverty,
increasing trade and regulation, growing role
Look at the article: Market Corrections, Or another step towards the end of Capitalism
Seattles $15 minimum wage law is supposed to lift workers out of poverty and move them off
Minimum wage is a modern upda
Ways to Allocate Resources
In Capitalistic markets resources are allocated by prices.
Markets allocate by prices.
If you have money you get something. If you dont you dont get anything.
If you dont use prices to allocate then you use ot
Forces influencing society
1. Technology how goods and services are produced.
2. Economic institutions sets of relations between people doing economic things. Ex: work,
3. Social Institutions Non economic ways people interact.
Religion and Usury
A few additional comments
This is not a course on religion or
even the detailed elements of
religion. However, certainly some
general views historically are very
important in the development of the
views of the mark
Chapter 4 Justus Moser: the market as destroyer of culture
The virtues of knowing ones place
o The market destroys pluralism by striking at the economic basis of local cultural
o Earliest critic of globalization
o Born in Germany
o The polit
Chapter 2 Voltaire book notes
attempted through his writing to mold public opinion
born in 1694 during the closing years of louis XIVs reign
died in 1778
A philosophe was a sage who isolated himself from the court. Later become known as a writ
Chapter 3 Adam Smith textbook notes
The wealth of nations
o Not written for businessmen or merchants
o Focused on the analysis of market processes motivated by self-interest
o Written to influence politicians and rouse them to pursue the common good