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AFM Acquisitions and mergers

اے سی سی اے · اسٹریٹجک پروفیشنل · 7 سوالات

نام: ____________________   تاریخ: ____________

  1. A target has annual earnings of $5m. An acquirer values it on its own price earnings ratio of 12. The value is:

    • A $5m
    • B $12m
    • C $60m
    • D $17m

  2. Which of the following is a common reason for a bid to fail to create value for the acquirer's shareholders?

    • A Paying a premium that is higher than the value of synergies
    • B Buying a business in the same sector
    • C Doing proper due diligence
    • D Having a clear integration plan

  3. Synergy of $10m a year in perpetuity, discounted at 10 percent, has a present value of:

    • A $10m
    • B $100m
    • C $1m
    • D $110m

  4. A target is worth $80m alone. Synergies are worth $20m and the offer price is $90m. The gain to the acquirer's shareholders is:

    • A $20m
    • B $30m
    • C $10m
    • D -$10m

  5. A takeover in which the bidder offers its own shares in exchange for the target's shares is a:

    • A Management buyout
    • B Cash offer
    • C Demerger
    • D Share for share offer

  6. A defence used by a target to avoid a hostile bid by persuading shareholders that the offer undervalues the company is:

    • A A defence document argument based on value and prospects
    • B A poison pill only
    • C A white knight bid only
    • D A Pac-Man defence

  7. Earnings per share after a share for share acquisition may fall if:

    • A Synergies are large
    • B The acquirer has a high P/E
    • C The acquirer's P/E is lower than the price paid in earnings terms
    • D The target has high earnings

جوابی کلید

1. C, 2. A, 3. B, 4. C, 5. D, 6. A, 7. C

  1. Value = earnings x P/E = 5 x 12 = $60m.

  2. The gains from synergy are shared, and a high premium can transfer all of them to the target's shareholders.

  3. Perpetuity value = 10 / 0.10 = $100m.

  4. Gain = value of target + synergies - price = 80 + 20 - 90 = $10m.

  5. In a share exchange, the target shareholders share in the future risks and gains of the combined firm.

  6. Management may argue that the price is too low and look for a more suitable bidder (a white knight).

  7. If the price paid per $ of earnings exceeds the acquirer's own P/E, EPS is diluted.