Task: Mergers and Acquisitions
1) What is your opinion to the question below?
There are three main types of acquisitions: an acquisition of assets, an acquisition of stock, and a consolidation or merger. With an acquisition of assets, a company acquires another company by purchasing all of the company's assets. With an acquisition of stock, the company's voting stock is bought in exchange for shares of stock, cash, etc. A merger occurs when one company is absorbed by another company. A consolidation is similar to a merger except that in a consolidation a completely new company emerges. An acquisition is characterized as a vertical acquisition, a horizontal acquisition, or a conglomerate acquisition. A vertical acquisition occurs when a company acquires a company that's from a different part of the production process. A horizontal acquisition occurs when a company acquires a competitor. A conglomerate acquisition occurs when a company acquires a company in a totally different industry. A Net Present Value (NPV) calculation is typically employed by a company to determine if an acquisition should move forward.
References:
Bruner, R.F. (2004, May 31). Applied mergers and acquisitions. Retrieved from
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=553561
Martynova, M., and Renneboog, L. (2006, February 1). Mergers and acquisitions in europe. Retrieved from
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=880379
Required:
Below are some questions for discussion.
1. What are three reasons, in general, why firms are acquired? Please provide details regarding each of these reasons.
2. State and describe a hostile takeover that occurred between 2000 and 2008. Is that hostile takeover concerned a success or failure today? Please explain.
3. Name and describe three strategies that companies can employ to deter a takeover.