Fusjoner og oppkjøp Flashcards
Gi en oversikt over momentene som gås gjennom ved M&A.
Overview Background Why merge/acquire ? Valuing an acquisition Who gains / looses ?
Redegjør for bakgrunnen og historiske trender for M&A.
Background and Historical Trends
Market for corporate control
Acquirer (or bidder) – the buyer of the firm
Target – the seller of the firm
The global takeover market is highly active,
averaging more than $1 trillion per year in
transaction value
Mergers typically happen in waves, e.g.
- 1960s: Conglomorates
- 1980s: Break-up (hostile takeovers)
- 1990-2008: Global industry consolidation
Hvilke typer Mergers har vi?
Types of Mergers:
- Horizontal merger
- Target and acquirer are in the same industry - Vertical merger
- Target’s industry buys from or sells to acquirer’s
industry - Conglomerate merger
- Target and acquirer in unrelated industries - Cash versus Stock merger
- Paying target shareholders for their shares in
cash or in shares of the acquiring company
(stock swap)
Hvilke potensielle områder kan man oppnå synergifordeler?
6
Potential areas of synergy benefits
- Cost savings (elimination)
- Revenue enhancements (sharing)
- Process improvements (transferral)
- Financial benefits
- Strategic benefits
Hva ligger i kostnadsbesparelser? Hvorfor omtales det som “hard synergies”?
Cost savings (“hard synergies”)
Most common type of synergy, easiest to estimate,
and normally the least uncertain
Common problems
– easier to eliminate positions than people
– underestimate the time needed
What can we do without a merger ?
─ Organic growth
─ Joint Venture
What will competitors do ?
What is already discounted in the stock price ?
Hva ligger i Revenue enhancements? Hvorfor omtales det som “Soft synergies”?
Revenue enhancements (“Soft synergies”)
Higher combined sales
– sharing distribution channel or superior products
– gain critical mass to attract revenues neither
could realize alone
Hard to estimate
– involve external variables beyond management’s
control (customers and competitors)
–> Often neglected, or heavily discounted in the final
assessment
Hva ligger i prosessforbedringer?
Transferal of best practices and core competencies
from one company to the other
–> Cost savings and/or revenue enhancements
Hva ligger i General Electrics ‘Six Sigma’?
GE’s SIX SIGMA
“Six Sigma is a highly disciplined process that helps us focus
on developing and delivering near-perfect products and
services. […] To achieve Six Sigma Quality, a process must
produce no more than 3.4 defects per million opportunities”
Hva ligger i finansielle og strategiske fordeler?
10
Financial and strategic benefits
Operational
─ pooling of working capital requirements
─ netting of currency positions
─ netting of taxable income
Longer term
─ lower cost of debt from diversification
─ transfer of free cash flow between companies
Strategic benefits
─ “ When someone says ‘strategic’, the rest of us say ‘too
expensive’”
Hva er teorien bak verdsetting av et oppkjøp?
The Takeover Process: Valuation and Synergies
A key issue for takeovers is quantifying and
discounting the value added as a result of the merger
– For simplicity, any additional value created will be
referred to as the takeover synergies
The price paid for a target is equal to the target’s prebid
market capitalization plus the premium paid in the
acquisition.
– If the pre-bid market capitalization is the standalone
value of the target, then the takeover is a
positive-NPV project for the bidder, only if
the premium < the synergies
Hva er fordelene og kostnadene til eiere ve oppkjøp? Hvordan kan det skrives matematisk?
(S)ynergy = VAT - (VA
+ VT)
(P)ayment
V_A + V_T –> V_AT.
Hvilke divisjoner kan gi gain (S):
NPV_T = P - V_T NPV_A = S - NPV_T
= V_AT - (V_A+P)
Hvordan bys det på et selskap?
The Offer
• Once the acquirer has completed the valuation
process, it is in the position to make a tender offer
for the shares in the target company
– Often acquirers have to raise the price to
consummate the deal
• A bidder can use one of two methods to pay for a
target:
1. cash
2. stock
Hva er max exchange ratio i en stock deal?
x = max. number of new shares offered for the
Target shares.
x <= (V_T + S)/(V_A/n_A)
Hvordan maximum exchange ratio i en stock deal utformes som en exchange ratio?
Exchange ratio = x/n_T <= ((V_T + S)/n_T)/(V_A/n_A) = (p_T/p_A)*(1+S/V_T)
in terms of pre-merger Target and Acquirer share
prices pT = VT/nT and pA = VA/nA:
Hvordan velges betalingsmetode?
19
Choice of payment method
Cash versus stock:
– Synergies
– Information asymmetries
– Under/over valuation
Tax implications (target owners):
– US: cash is taxable, securities are tax-free
(deferred taxation)
– Norway: same as US, if target is merged into
the acquiring company
Hvilke typer mergers har preget ulike tidsperioder?
New Evidence and Perpectives on Mergers
Andrade, Mitchell & Stafford, J. of Ec. Perspectives; 2001
US M&As 1973 - 98 ─ 1973-79: conglomerates ─ 1980-89: unfriendly cash bids ─ 1990-98: friendly stock bids ─ Falling bid premiums
Hvem tjener og hvem taper på en merger?
Target shareholders gain:
US M&As 1973 - 98
Target: All (16%), Stock (13%), Cash(20,1%)
Acquierer: All(-0,7%), Stock (-1,5%), Cash(0,4%)
Kombinert: All (1,8%), stock (0,6%), Cash (3,6%)
Why the small bidder returns ?
– Competition among bidders (undisciplined bidding?)
– Unequal size: bidder on average 8xTarget
– Acquisition value already discounted in bidder’s price
– bidders are frequent acquirers
Undervalued Target shares ?
–no: price increase typically reversed if unsuccessful bid
Hvem er et oppkjøp bedre for?
Better for
– Larger acquirers (GE?)
- Cash deals
- Value acquirers (lower P/B & P/E)
