4/22/2021 Gateway - SCS Mock 1 Debrief Strategic problems of Merger There are also likely to be o number of significant problems involved in a merger of ‘two companies (even if it isa "friendly" merger) including + Neither Arrfield or Skylaine has specific ‘experience of successful acquisition and ‘subsequent integration of two companies of this size/type + There are likely to be a number of ‘sgrificant post-acquisition problems and re-structuring issues (e.g, adoption of ‘Skylaine's TS/IT/IM & Board integration) Strategic problems of Merger + There is « high chance of Regulatory intervention (given previous controversy in the acquisition of CCM in 1994), The proposed Merger may be prohibited to ‘avoid competition concerns or there may be onerous conditions imposed on the new combined compary by regulators. + One of the most significant challenges involves the integration of a ‘mature’ culture (Arrfield has been in existence Since 1980) with Skylaine where the. current directors own 15% of the share copital (likely to have a different culture) Gateway - SCS Mock 1 Debrief Strategic problems of Merger + There may be resistance from a number of stakeholders (e.g, Skylaine or Arrfield shareholders, Directors, Management and/or EEs). For example there may be concerns about redundancies following merger os planned synergies ore implemented + Problems encountered in attempting to agrees the share allocation between the respective groups of shareholders (Arrfield & Skyiaine)- this is likely to be particularly chatlerging ‘© Peter Plant - Fist Financial Training Strategic Issues in Merger + Aton appropriate time (early in the negotiations when the two company boards have met and if they appear to'be progressing towards a Heads of ‘Agreement, it would be very important to determine if stitution X ~ shareholder in both companies) is supportive or resistant +o the proposed merger under consideration