Problem
1. Takeover defences are commonly employed by company management, if they are concerned about potential future bids. Briefly describe some common defences, both pre- and post-bid.
2. Whenever a proposed merger or acquisition is announced, it will be accompanied by a claim that there will be benefits for shareholders. Identify the more common reasons offered as to why a benefit can be expected, and discuss whether or not they are realistic. Briefly review available research evidence on what is the actual impact of mergers and acquisitions.
3. Outline the practical issues that a financial manager should take into account when determining the level of the next dividend that will be paid to shareholders. Your answer should include an explanation of both the Signalling Hypothesis and the Clientele Effect.
4. Compare a share repurchase with a cash dividend, and suggest possible reasons why a company may repurchase shares. Review evidence on the incidence of share repurchases. Conclude by describing the methods available to a company that wishes to repurchase shares.