what proactive strategies can an acquiree use to prevent being acquired?
- improve performance (to cancel out any synergies)
- share split, new div policy, issuing more shares after being acquired to dilute control
- amending MOI
- selling valuable assets (to make it less worthwhile for someone to acquire)
what reactive strategies can an acquiree use to prevent being acquired?
- BoD can announce its disagreement with the deal due to unfairness
- alternative friendly merger
- counter attack
- disclose new information
what is an indicator of lost value?
trading at a discount to the NAV
disadvantages of unbundling?
- loss of financing abilities, key assets and staff
- very expensive / paperwork to change asset ownership
who can initiate business rescue?
- creditors / stakeholders
- BoD
what happens under business rescue?
- restructuring of business affairs
- moratorium on rights of creditors
- supervision by a business rescue practitioner
what to steps to consider in an M&A question?
1) synergies / reasons for acq
2) financing and structure
3) due diligence, risks, legalities
4) mgmt attitude / integration / after-effects
what steps to consider in a dividend/SBB question?
1) policy, amount of div
2) effect on company, ratios, RE, risks, whether appropriate given context & S/L
3) effect on SH, prefs, tax
4) Co. Act reqs (distr)
5) effect on market, SP, signalling
6) alternatives to divs
what is the bank’s buy / sell rate?
rate at which they would buy or sell you foreign currency
what is the bank’s margin or spread?
the difference between their buy and sell rates
what is a mid-rate?
the average of buy and sell rates
what influences the foreign exchange market?
- different interest rates of countries
- inflation
how do we determine the difference between spot and forward rates?
the difference between the interest rates of the two countries
what is arbitrage?
buying and selling different currencies, commodities, securities in different market to take advantage of price differences
what are the 3 types of foreign exchange exposures?
- translation exposure
- transaction exposure
- economic exposure
what is translation exposure?
effect of potential FC gains and losses on the accounting results
what is transaction exposure?
effect of potential FC gains and losses when entering into a transaction for which the terms are in the FC
what is economic exposure?
long term real effects of changes in the exchange rate
how can a company protect itself from changes in FCs?
applying hedging policies such as instruments or natural hedging
