Merger and Acquisition

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Materi Asistensi Merjer dan Akuisisi

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Merger and Acquisition

  1. 1. Pertemuan 9Rabu, 5 Desember 2012
  2. 2. MERGER AND ACQUISITION
  3. 3. Three Basic Legal Procedures• Merger or consolidation– Merger  Acquiring firms retains its name and itsidentity, and it acquires all the asset and liabilitiesof the acquired firm.– Consolidation  entirely new firm is created• Acquisition of stock– Purchase the firm’s voting stock with an exchangeof cash, shares of stock or other securities• Acquisition of assets– Buying most or all of acquired company’s assets
  4. 4. Gains from Acquisition• Synergy– VAB > VA + VB  ΔV = VAB – (VA + VB )• Revenue enhancement• Cost reductions• Lower taxes• Reducing in capital needs
  5. 5. Financial Side Effects of Acquisition• Assume no synergy
  6. 6. Cost of Acquisition• ΔV = VAB – (VA + VB )• Total value of firm B to firm A, V*B , is– V*B = ΔV + VB• NPV of the merger is therefore– NPV = V*B – Cost to firm A of the acquisition• Merger premium– Kelebihan pembayaran diatas market value
  7. 7. Illustration• Suppose firm A estimate that firm B will giveincremental value to it by 100.• Firm B will agree if the price offered is 150,payable in cash or stock
  8. 8. Illustration• NPV = V*B – Cost to firm A of the acquisition• NPV = (ΔV + VB)– Cost to firm A of the acquisition• (ΔV + VB) = 100 + 100 = 200• Case 1: Cash Acquisition• NPV = (ΔV + VB)– Cost to firm A of the acquisition• NPV = 200 – 150 = 50 (profitable)• AB still have 25 shares outstanding, value of firm A afterthe merger– VAB = VA + (V*B - cost)– VAB = 500 +200 – 150 = $550– Price per share after merger = $550/25 = $22
  9. 9. Illustration• Case 2 Stock Acquisition  Firm B come in asnew shareholders in the merged firm• VAB = VA + VB + ΔV = $500 + $100 + $100 = $700• Firm A should issue additional shares:– $150/20 = 7.5 additional shares– After merge, outstanding shares 25 + 7.5 = 32.5 price per share = $700/32.5 = $21.54– Firm B received 7,5 shares equivalent with• 7,5 x $21.54 = $161.55• NPV = V*B – Cost to firm A of the acquisition =– $200 - $161.55 = $38.45
  10. 10. Cash or Stock?• If acquisition results a gain (positive NPV)– Cash is better than stock• If acquisition results a loss (negative NPV)– Stock is better than cash because the loss isshared between the two firms• Control  acquisition by paying cash does notaffect the control of the acquiring firm

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