Lernkarten

Topics:

• Basic terminology
• Types of mergers
• Risk arbitrage
• Importance of M&A and recent deals
• Merger outlook
• Legal framework

• Negotiated deal
• Mostly friendly parties
• Mutually agreeable decision to combine companies

• Direct offer to shareholders to tender (sell) their shares at a specified price
• Obtaining >50% of shares (Approval required)
• Friendly or hostile

• Conditional or unconditional
  • e.g. min. 50% interest
• Restricted or unrestricted
  • e.g. 70%, "any-or-all"
• Contested offer
• Two-tier offer or three-piece suitor: e.g.
  • Initial toehold
  • 1^st tier for cash (to obtain >50% interest)
  • 2^nd tier at a lower value (often paid in dept securities)

If buyout not completed:

• Freeze-in problem
• Possible legal actions

Solution: Minority squeeze-out

• Horizontal
• Vertical
• Conglomerate

• Same kind of business
• Benefits from economies of scale and synergies
• Government regulation due to fear of monopoly power

• Firms of different stage of production/operation
• Benefits from information- and transaction efficiency (e.g. inventory, production, prices, procurement)