Ch 3 Deck 5

Question 1

compares the earnings per share of the buyer before the acquisition with the earnings per share after the acquisition

Answer 1

accretion/dilution analysis

Question 2

sometimes a dilutive deal may still be attractive because it shows

Answer 2

increased value in the future

Question 3

occurs when two companies combined is more profitable than the sum of the two separately

Answer 3

synergy

Question 4

Under Hart Scott Rodino Antitrust Improvements (HSR) act most merger transactions must file

Answer 4

a notification and report to the FTC and the Anti Trust Division of DOJ

Question 5

Purpose of notifying FTC and DOJ Under Hart Scott Rodino Antitrust Improvements (HSR) act is

Answer 5

to provide them with information about large mergers and tender offers before they occur.

Question 6

Under Hart Scott Rodino Antitrust Improvements (HSR) Act The notification is typically filed

Answer 6

after the definitive merger agreement is signed

Question 7

Under Hart Scott Rodino Antitrust Improvements (HSR) Act after filing the waiting period for mergers is

Answer 7

30 days

Question 8

Under Hart Scott Rodino Antitrust Improvements (HSR) Act after filing the waiting period for tender offers is

Answer 8

15 days

Question 9

Under Hart Scott Rodino Antitrust Improvements (HSR) Act during the waiting period either the FTC or the Department of Justice will

Answer 9

either the FTC or the Department of Justice will assess whether the transaction violates U.S. antitrust laws

Question 10

Under Hart Scott Rodino Antitrust Improvements (HSR) Act during the waiting period either the FTC or the Department of Justice can choose to

Answer 10

require further information or extend the waiting period.

Question 11

Under Hart Scott Rodino Antitrust Improvements (HSR) Act during the waiting period filers can

Answer 11

request early termination of the waiting period which is sometimes granted

Question 12

Under Hart Scott Rodino Antitrust Improvements (HSR) Act in order for the deal to close

Answer 12

the waiting period must end and both FTC and DOJ must determine there are no antitrust concerns

Question 13

Under Hart Scott Rodino Antitrust Improvements (HSR) Act filing is required if the three tests are met of:

Answer 13

commerce test
size of transaction test
size of person test

Question 14

HSR Commerce test is met if

Answer 14

the “acquired person” or “acquiring person” is engaged in commerce (almost always met)

Question 15

HSR Size of transaction test is related to

Answer 15

value of what is being acquired

Question 16

HSR Size of transaction test limit as of 2010: No filing is required if the transaction is valued under

Answer 16

$63.4M

Question 17

HSR Size of transaction test limit as of 2010: filing is required if the transaction is valued over

Answer 17

$253.7M

Question 18

HSR Size of transaction test limit as of 2010: if the transaction is valued between $63.4M and $253.7M then

Answer 18

the size of person test is used

Question 19

HSR Size of transaction test limits as of 2009 were

Answer 19

Under $62.5M and over $260.7M

Question 20

HSR size of person test requires you to

Answer 20

determine the net sales and total assets for the entities involved in the acquisition

Question 21

In an acquisition, lists the duties and obligations of each party with respect to the proposed transaction

Answer 21

Letter of intent

Question 22

a beginning step in a proposed business combination transaction is the

Answer 22

letter of intent

Question 23

in an acquisition, a letter of intent would not force

Answer 23

public disclosure by either the target or acquiring company

Question 24

letter of intent would typically obligate each party to maintain

Answer 24

confidentiality about the proposed business transaction while each party is fulfilling its respective duties and obligations.

Question 25

A business combination letter of intent includes this information

Answer 25

The price
the form of consideration
structure of the deal (merger or acquisition)

Question 26

A business combination letter of intent does NOT include

Answer 26

a binding obligation

Question 27

A business combination letter of intent includes these provisions

Answer 27

I. confidentiality
II. walk-away fees
III. access to the selling entity’s books and records
IV. no-shop agreement