FCL622 MERGERS & ACQUISITIONS

FCL622

WINTER MONDAY: 6:00-9:00 P.M OFFICE HOURS: M 5:00-6:00 And by appointment

DR. ED EDWARDS

OFFICE: 3296 HCOB

PHONE:387-5722

FAX: 387-5839

E-MAIL: ed.edwards@wmich.edu

TEXT:

Weston, Chung and Siu, Takeovers, Restructuring and Corporate Governance (Prentice-Hall,
2nd edition)

        OUTLINES:
                Ch.1   - The Takover Process - download
                Ch.2   - The Legal and Regulatory Process - download
                Ch.17 - International Takeovers and Restructuring - download

                Ch.5   - Theories of Mergers and Tender Offers - download
                Ch.6   - The Timing of Merger Activity - download
                Ch.7   - Empirical Tests of M&A Performance - download
                Acquisition Planning
                Overview of Acquisition Process
                Reasons for Buying a Company
                Reasons for Selling a Company
                Ch.8   - Diversification, Mergers & Strategic Planning
                Ch.9   - Alternative Approaches to Valuation

ASSIGNED READING FOR FEBRUARY 8:
The Elements of a Professional Business Valuation

        OTHER MATERIALS:
                  Factors to be considered in analyzing possible acquisition (Factor#1-13) - download + print
                             (that's the best version I could get from the scanner, so first print and then read;
                                it will take time to print)
        ASSIGNED READING FOR FEBRUARY 15:
                 Company Valuation

        OTHER MATERIALS ON INTERNET
                Tutorials on the IBA Transaction Database
                             (valuing small to mid-size closely held businesses)

         ASSIGNED READING FOR MARCH 15:
                  How an Accounting Rule Spoiled a Popular Deal Format - download
                  Europe Catches Merger Fever - download

         ASSIGNED READINGS FOR MARCH 22:
                  Do Deals Deliver On Postmerger Performance? - download
                  Purchase Price Protection In Overseas Acquisitions - download

OUTLINE
Merger Between Duracell And Gillette

        LECTURE OUTLINE, MARCH 22
                Restructuring and Divestments
                Reasons, Factors to be Considered, Costs, and Evaluation
                Restructuring Ownership Relationships
                LBO's
                Desirability of LBO Candidates
                LBO Decision

       LECTURE OUTLINE, MARCH 29
                3 Tables about Percent Premiums - download
                4 Graphs about Cumulative Abnormal Returns - download
                Tender Offers for Publicly Traded Target Companies - download
                2 Graphs about Tender Offers - download
                Definition of Tender Offer + Eight Factor Test
                Summary of Williams Act
                Sources of Law Affecting Tender Offers - download
                Michigan Law - download
                Planning a Tender Offer, Process

Characteristics of Takeover Targets, Corporate Restructuring to Reduce Probability of a Takeover,
Principal Characterisitcs of a Potential Takeover Candidate,14 Tactics for Fighting Take-Over,
Zero or Negative Returns to Scquireres at Announcement Date, Some Specific Considerations

2 Graphs: Proxy Fight Data and Poinson Pill Adopted - download

2 TABLES FOR THE LAST CASE: PRINT-TO-FIT
Projected Total CF Valuation Framework and Projected CF to Equity Capital Valuation Framework

COURSE INCIDENTALS:

1. Mission Statement of the Haworth College of Business.

2. Mission Statement and Goals of the Graduate Program at the Haworth College of Business.

3. The Objectives of this course.

4. Manner of course presentation.

5. Attendance Policy.

6. University Regulations Regarding Dishonesty.

7. Grading Scale.

8. Course Outline.

MISSION STATEMENT FOR GRADUATE PROGRAMS IN THE HAWORTH COLLEGE OF BUSINESS

The Haworth College of Business is dedicated to providing excellent graduate programs designed to help current and future managers meet the challenges of a changing global business environment. Using shared learning, fostering integration and recognizing diversity, our graduate programs expand the skills of Business Professionals from Western Michigan and selected international markets.

OBJECTIVES OF THE GRADUATE PROGRAMS IN THE HAWORTH COLLEGE OF BUSINESS 1. To provide excellent graduate programs for specific markets.

2. To deliver programs that assist students with the advancement of skills in leadership, analysis and team work.

3. To provide seminars and training programs for specific markets.

4. To provide a program which utilizes methodologies that will enable students to become participants in the development of knowledge.

5. To operate in a continuous improvement environment.

MISSION STATEMENT FOR THE FINANCE AND COMMERCIAL LAW DEPARTMENT

The Finance and Commercial Law (FCL) Department provides a high-quality education in finance and commercial law at both the undergraduate and graduate levels.

VISION STATEMENT FOR THE FINANCE AND COMMERCIAL LAW DEPARTMENT

This education enhances the knowledge, skills and abilities of students. The quality of learning is strengthened by: experiences, such as cases, internships, study abroad, and professional business seminars; use of technology; and a faculty committed to professional development and research.

COURSE OBJECTIVES

1. To provide an insight into the merger movements and antitrust philosophy in the United States, Europe and Asia.

2. To provide an appreciation for the process of planning, valuing and financing business acquisitions.

3. To provide a framework for the valuation process for closely-held and publicly-traded companies.

4. To consider the impact of current trends in business takeovers.

5. To consider the financial aspects of various litigation areas involving valuation issues (wrongful death, age/sex discrimination, wrongful termination, personal injury, etc).

6. To consider the financial aspects of divestments, restructurings and privatization programs.

COURSE PRESENTATION

Lecture-discussion as well as case presentations.

TERM PAPER

A term paper (assigned in Sessions 1 and 2) will be required. Topics will be selected by students from a list provided in class. Length expected to approximate 10 pages.

CASE PRESENTATIONS

There will be three case presentations. Each student will be assigned to a group for one presentation. Teams will be assigned on January 25.

PARTICIPATION

You are expected to participate in your own group presentation and to provide 3-4 page brief analysis of the two cases in which your group did not participate. These are due on the night the cases are presented.

ATTENDANCE

Since the course meets only 12 times for 3-hour sessions, it is expected that you attend all classes. Only one unexcused absence will be permitted. If work commitments require you to miss more than one class, your semester grade will be compromised.

GRADING SCALE

                        1. Midterm                      25
                        2. Final exam                   25
                        3. Paper                           15
                        4. Case presentation       25
                        5. Participation                10
                                                               100 pts.

COURSE OUTLINE

January 11 Takeover Regulations - National & State Ch. 1, 2, 21

January 18 MLK Day - No classes

January 25 International Mergers and Acquisitions

February 1 Merger Theories Ch. 5-7, 22

February 8 Valuation of Closely Held Companies Ch. 8-10A

February 15 Valuation of Closely Held Companies Ch. 8-10A

February 22 MIDTERM EXAM (Chapters 1, 2, 5, 7, 8-10A, 21, 22)

March 1 SPRING BREAK

March 8 Valuation of Public Companies Ch. 8-10A

March 15 Accounting and Tax Considerations Ch. 3 & 4

March 22 Restructuring Ch. 11-15