Mergers

Fundamentals of Financial Management, 12e
Chapter 23: Mergers and Other Forms of Corporate Restructuring

After studying Chapter 23, you should be able to:

Chapter 23

Explain why a company might decide to engage in corporate restructuring. Understand and calculate the impact on earnings and on market value of companies involved in mergers.
Describe what benefits, if any, accrue to acquiring company shareholders and to selling company shareholders.
Analyze a proposed merger as a capital budgeting problem.
Describe the merger process from its beginning to its conclusion.
Describe different ways to defend against an unwanted takeover.
Discuss strategic alliances and understand how outsourcing has contributed to the formation of virtual corporations.
Explain what “divestiture” is and how it may be accomplished.
Understand what "going private" means and what factors may motivate management to take a company private.
Explain what a leveraged buyout is and what risk it entails.

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Mergers and Other
Forms of Corporate
Restructuring

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© Pearson Education Limited 2004
Fundamentals of Financial Management, 12/e
Created by: Gregory A. Kuhlemeyer, Ph.D.
Carroll College, Waukesha, WI

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Mergers and Other Forms of Corporate Restructuring

Mergers and Other Forms of Corporate Restructuring

 Sources

of Value
 Strategic Acquisitions
Involving Common Stock
 Acquisitions and Capital
Budgeting
 Closing the Deal
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 Takeovers,

Tender Offers, and

Defenses
 Strategic Alliances
 Divestiture
 Ownership Restructuring
 Leveraged Buyouts
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What is Corporate
Restructuring?

Why Engage in
Corporate Restructuring?

Any change in a company’s:
1. Capital structure,
2. Operations, or
3. Ownership that is outside its ordinary course of business. 
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So where is the value coming from (why restructure)?
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Van Horne & Wachowicz,
© Pearson