tailieunhanh - Lecture Business finance - Chapter 20: Analysis of takeovers

In this chapter, students will be able to understand: Evaluate suggested reasons for takeovers, explain how to estimate the gains and costs of takeovers, explain the main differences between cash and share-exchange takeovers, outline the regulation and tax effects of takeovers in Australia,. | Chapter 20 Analysis of Takeovers 2 2 2 2 3 3 Learning Objectives Evaluate suggested reasons for takeovers. Explain how to estimate the gains and costs of takeovers. Explain the main differences between cash and share-exchange takeovers. Outline the regulation and tax effects of takeovers in Australia. 2 2 2 2 3 3 Learning Objectives (cont.) Outline defence strategies that can be used by target companies. Identify the various types of corporate restructuring transactions. Outline the main findings of empirical research on the effects of takeovers on shareholders’ wealth. 3 3 3 Fundamental Concepts Takeovers typically involve one company purchasing another by acquiring a controlling interest in its voting shares. Also called ‘acquisitions’ and ‘mergers’. Market for corporate control A market in which alternative teams of managers compete for the right to control corporate assets. Such a market enables the quick redeployment of assets in ways expected to bring economic benefits to . | Chapter 20 Analysis of Takeovers 2 2 2 2 3 3 Learning Objectives Evaluate suggested reasons for takeovers. Explain how to estimate the gains and costs of takeovers. Explain the main differences between cash and share-exchange takeovers. Outline the regulation and tax effects of takeovers in Australia. 2 2 2 2 3 3 Learning Objectives (cont.) Outline defence strategies that can be used by target companies. Identify the various types of corporate restructuring transactions. Outline the main findings of empirical research on the effects of takeovers on shareholders’ wealth. 3 3 3 Fundamental Concepts Takeovers typically involve one company purchasing another by acquiring a controlling interest in its voting shares. Also called ‘acquisitions’ and ‘mergers’. Market for corporate control A market in which alternative teams of managers compete for the right to control corporate assets. Such a market enables the quick redeployment of assets in ways expected to bring economic benefits to shareholders. 4 4 4 4 4 4 Importance of Takeovers in Australia Important because they involve changes in the ownership and/or control of valuable assets. Table shows Ernst & Young survey results on acquisitions by Australian listed industrial companies with a total market capitalisation of more than $45m. Table 5 5 5 5 Fluctuations in Takeover Activity No generally accepted explanation for the existence of takeover ‘waves’: Evidence that takeover activity is positively related to the behaviour of share prices. Periods when share prices are increasing are also periods of optimism for investment. While companies will increase internal investment (new plant and equipment) they will also look for external investment (opportunities to take control of existing assets). Changes in legislation controlling takeovers may also influence the level of takeover activity. 7 7 Fluctuations in Takeover Activity (cont.) Recent results from the US suggest: Takeovers triggered by industry-level .