Course Title: Mergers, Acquisitions and Corporate Restructurings

Course Code: Credit Hours: 3+0

Course Instructor:
Prerequisites: Financial Accounting, Managerial Accounting, Financial Management, Corporate
Finance, Corporate Governance
Textbooks (or Course Materials) with Edition
1. Gaughan, P. A. (2015). Mergers, Acquisitions, and Corporate Restructurings, (6th edn) John
Wiley & Sons, New York
2. Desai J. M. & Joshi N. A. (2012). Mergers and Acquisitions. (1st edn) Biztantra, Dreamtech,
Delhi, India
Reference Material
1. Weston, J. F. & weaver, S. C. (2001). Mergers and Acquisitions, The Mcgraw-Hill Executive
MBA Series, New York, USA
2. Baker, H. K. & Kiymaz, H. (2011). THE ART OF CAPITAL RESTRUCTURING: Creating
Shareholder Value through Mergers and Acquisitions. JohnWiley & Sons, Inc., Hoboken, New
Jersey, USA
3. Weston, J. F., Mitchell, M. L. & Mulherin, J. H. (n. d.) Takeovers, Restructuring, and Corporate
Governance (4th edn.), Pearson Educational International
4. Research Articles: A set of research articles will be allocated to students as a group project for
classroom presentation which will also be part of semester exams
Assessment Instrument with Weights
Midterm 30%
End term 50%
Internal evaluation 20% (3 quizzes, 5 assignments, final project & presentations).

Week # Lecture # TOPICS TO BE COVERED

1. Chapter 1. Introduction
Recent M&A Trends
Types of Mergers
Reasons for Mergers and Acquisitions
1.
2. Merger Financing (Merger Consideration)
Leveraged Buyouts and the Private Equity Market
Reverse Mergers
Holding Companies (Advantages and Disadvantages)
3. Corporate Restructurings (From Jay M. Desai & Nisarg A. Joshi Book)
Types of corporate restructuring (Financial, Organizational & Portfolio
Restructuring)
Objectives of corporate restructuring
2. Forms of corporate restructuring (Expansion & Contraction)
4. Types of Expansion
Motives for Expansion
Types of Contraction
Motives for Contraction
 5. Chapter 2. History of Mergers

What Causes Merger Waves?

First Wave, 1897–1904
Second Wave, 1916–1929
3. 6. Third Wave, 1965–1969
Fourth Wave, 1984–1989

Fifth Wave, 1992-2001

Sixth Wave, 2004-2007

7. Theories of Mergers & Acquisitions (From Research Article)
Trautwein, F. (1990). Merger Motives and Merger Prescriptions. Strategic
Management Journal, 11(4), 283-295.
Efficiency Theory
Monopoly Theory
Raider Theory
4.
Valuation Theory
8. Theories of Mergers & Acquisitions…
Empire-building Theory
Process Theory
Disturbance Theory
Q-Theory (Tobin’s Q)
9. Why Many Mergers & Acquisitions Fail to Create Shareholder Value
(From Additional Notes)
No strategic fit
Over estimation of growth from M&A
Over estimation of cost reduction
Underestimation of the difficulty and costs of extracting value
Post-M&A Integration
5. Overpayment
10. Avoiding the Pitfalls in Mergers & Acquisition
Don’t confuse the objective
Have a clear growth strategy
Identify the value drivers and the process of extracting value
Fully understand the costs of integrating the target
Do the legal due diligence
Know when to walk away
6. 11. Chapter 4. Merger Strategy
Growth
Synergy
Operating Synergy, Financial Synergy
12 Merger Strategy…
Diversification
Hubris Hypothesis of Takeovers
Other Motives
 Tax Motives
13. Chapter 5. Antitakeover Measures
Management Entrenchment Hypothesis versus Stockholder Interests Hypothesis
Preventative and Active Antitakeover Measures
7. Characteristics of firms vulnerable to a takeover
14. Preventative Antitakeover Defenses
Poison pills, Corporate charter amendments, Golden parachutes
Investors Wealth Effect of Preventative Antitakeover Defenses
MID TERM EXAMS
15. Paper show off and discussion
16. Active Antitakeover Defenses
8. Greenmail, Standstill agreements, White knight, White squire, Capital structure
changes, Litigation, Pac-Man defense, ‘‘Just Say No’’ Defense
Information Content of Takeover Resistance
17. Chapter 6. Takeover Tactics
Preliminary Takeover Steps
Establishing a Toehold, Casual Pass, Bear Hugs, Bypass Offers, Tender Offers
9.
18. Cash versus Securities Tender Offers
Two-Tiered Tender Offers
Any-and-All versus Partial Tender Offers
19. Chapter 6. Takeover Tactics…
Open Market Purchases and Street Sweeps
Advantages of Tender Offers over Open Market Purchases
Proxy Fights/ Contests
Shareholder Wealth Effects of Different Takeover Tactics
10.
20. Chapter 14. Valuation
Valuation Methods: Science or Art?
Discounted Cash Flow Methods
Using Dividend Discount Models
Case Study: Evaluating M&A Deals: Introduction to Deal NPV
21. Desirable Financial Characteristics of Targets
Free Cash Flow Theory of M&A
11.
22. Determining Value by using Different Multiples
Choice of the Discount Rate: Cost of Capital and the Discount Rate
23. Chapter 14. Valuation…
Pre & Post merger value of bidder and target
12. Determining the value of synergy
24. Determining the Net Acquisition Value (NAV) of M&A for bidder firm
Takeovers and Control Premiums
25. Chapter 14. Valuation…
Cash Payment to target company shareholders
Valuation of Stock-for-Stock Exchanges
13.
Exchange Ratio
26. Shareholder Wealth Effects and Methods of Payment
Takeovers and Stock-for-Stock Transactions
14. 27. Chapter 10. Corporate Restructuring
 Forms of Corporate Restructuring
Divestitures, Equity Carve-outs, Spinoffs, Split-offs, Exchange offer, Split-ups
28. Involuntary versus Voluntary Divestitures
Divestiture and Spinoff Process
Wealth Effects of Selloffs
Equity Carve-Outs versus Public Offerings
Equity Carve-Outs versus Spinoffs
Voluntary Liquidations or Bust-ups