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Mergers and Acquisitions

Evaluate job offers; Synergy through mergers and acquisitions.

You have two job offers, one from a dominant-business firm and one from an unrelated diversified firm (suppose the beginning salaries are virtually identical). Which offer would they accept and why? What is synergy, and how do firms create it through mergers and acquisitions? In your opinion, how often do acquisitions creat

Messner Co. reported $145,000 of net income for 2010. The accountant, in preparing the statement of cash flows, noted several items occurring during 2010 that might affect cash flows from operating activities. These items are listed below. 1-Messner purchased 100 shares of treasury stock at a cost of $20 per share. These shares were then resold at $25 per share. 2- Messner sold 100 shares of IBM common at $200 per share. The acquisition cost of these shares was $165 per share. This investment was shown on Messner's December 31, 2009, balance sheet as an available-for-sale security. 3- Messner revised its estimate for bad debts. Before 2010, Messner's bad debt expense was 1% of its net sales. In 2010, this percentage was increased to 2%. Net sales for 2010 were $500,000, and net accounts receivable decreased by $12,000 during 2010. 4- Messner issued 500 shares of its $10 par common stock for a patent. The market value of the shares on the date of the transaction was $23 per share. 5- Depreciation expense is $39,000. 6- Messner Co. holds 30% of the Sanchez Company's common stock as a long-term investment. Sanchez Company reported $27,000 of net income for 2010. 7- Sanchez Company paid a total of $2,000 of cash dividends to all investees in 2010. 8- Messner declared a 10% stock dividend. One thousand shares of $10 par common stock were distributed. The market price at date of issuance was $20 per share. Instructions Complete a schedule that shows the net cash flow from operating activities using the indirect method. Assume no items other than those listed above affected the computation of 2010 net cash flow from operating activities. Cash flows from operating activities $ Adjustments to reconcile net income to net cash provided by operating activities: $ $ $ $ $ $ Net cash provided/used by operating activities $

Messner Co. reported $145,000 of net income for 2010. The accountant, in preparing the statement of cash flows, noted several items occurring during 2010 that might affect cash flows from operating activities. These items are listed below. 1-Messner purchased 100 shares of treasury stock at a cost of $20 per share. These sha

Research strategies; team dilemma; external roles for team members; merger effect

Question 1 of 4: Research strategies for moving parties away from egocentric perceptions of conflict and toward more mutually-held perceptions. Question 2 of 4: Consider the following team dilemma example: ¨A group of MBA students is working on a class project that counts for 50 percent of their grade. Some take a higher c

Control premium percentage, total transaction value

1. Bulldog Industries is offering, as consideration for merger target Blazerco, 1.5 shares of their stock for each share of Blazerco. There are 1 million shares of Blazerco outstanding, and its stock price was $50 before the merger offer. Bulldog's preoffer stock price was $40. What is the control premium percentage offered? Now

FIN/370 Virtual Organization Strategy

Select a Virtual Organization (Huffman Trucking). Assume that your selected organization is a privately held company and that it wants to expand its operations. The organization is faced with the below option to expand its operations. Option: They can acquire another company in the same industry. Must cover: 1) Stre

Step Acquisition of Company B by Company A

See the attachments. On 5th July 2007 company A initially invested 15% in company B @ par ( i.e. paying CU 1 per share ) (no premium). On 2nd August, 2007 A acquired additional 10% in company B buying 50 million shares from other exiting shareholder on an OTC basis ( paying CU2 per share (the extra CU 1 above par of CU 1

Southwest Airlines Acquisition Strategy for AirTran

Given the recent announcement of acquisition of AirTran by Southwest Airlines, analyze the Southwest's acquisition strategy to determine the long-term impact (synergy) on the value of the company. Explain what the management rationale (motive) behind the acquisition of AirTran, whether you agree with the management or you differ

Corporate Acquisitions and Losses

Scenario: Many corporate acquisitions result in losses to the acquiring firms' stockholders. A coworker has asked you to explain what a firm would gain from purchasing another corporation. Explain to the coworker the fundamentals of corporate acquisitions. 1. Why do firms purchase other corporations? 2. Do firms pay too m

Hewlett Packard/Compaq merger

For the Hewlett Packard/Compaq merger, and in relevance to contingency plans which could have been anticipated for the strategy, As a result of your investigation and analysis, would you recommend a different strategy? Why or why not? APA format. Please cite sources.

1) Name three of the ten Change Forces. 2) The greatest change force is technological changes - True or False? 3) What is the difference between Merger and Tender Offer? 4) What are the eight Federal Securities Laws? 5) M&A activities include: A) Joint Ventures B) Divestitures C) Carve-outs D) Spin-offs E) All of the above 6) Define: Horizontal Merger 7) Define: Vertical Merger 8) Define: Conglomerate Merger 9) Define: Hostile Takeovers 10) Name two characteristics that a firm may possess that make it vulnerable to a takeover 11) The study of valuation is important for M&A because a major cause of acquisition failures is that the bidder pays too much. True or False 12) The leading methods used in the valuation include: A) comparable companies or comparable transactions approach B) spreadsheet approach C) formula approach D) All of the above 13) Valuation is central to the merger process? True of False 14) Firms should merge only if the value to shareholders will be enhanced. True or False 15) Internal control mechanisms for effective corporate governance include the board of directors, ownership concentration, and executive compensation. True or False 16) Outside control mechanisms for effective corporate governance include stock price performance, institutional investors, proxy contests, and takeovers. True or False 17) List three reasons why mergers fail.

1) Name three of the ten Change Forces. 2) The greatest change force is technological changes - True or False? 3) What is the difference between Merger and Tender Offer? 4) What are the eight Federal Securities Laws? 5) M&A activities include: A) Joint Ventures B) Divestitures C) Carve-outs D) Spin-offs E) Al

Merger of Sprint and T-Mobile Add Value to Shareholders of Both

Rumors about potential mergers are often a hot topic in the business press. One rumor being floated around recently is a potential merger between mobile phone giants T-Mobile and Sprint. Mergers between two large companies are always complicated, but some have noted the possible synergies in 4G technologies that might be possibl

Mergers and Shareholder Value for Bentley and Rolls

Bentley Corp. and Rolls Manfacturing are considering a merger. The possible states of the economy and each company's value are below: State Probability Bentley Rolls Boom 0.7 $280,000 $250,000 Recession 0.3 $100,000 $70,000 Bentley currently has a bond issue out

Fixed costs, sunk costs, merger, profit sharing plan

9. To open a new business, a manager must obtain a license from the city for $20,000. The license is transferable, but only $3,000 is refundable in the event the firm does not use the license. a. What are the firm's fixed costs? Sunk costs? b. Suppose the manager obtains a license but then decides against opening the business

Finance: Share calculations.

ABC is evaluating a proposed merger into DEF. ABC had 2009 earnings of $200,000, has 100,000 shares of common stock outstanding, and expects earnings to grow at an annual rate of 7%. DEF had 2009 earnings of $800,000, has 200,000 shares of common stock outstanding, and expects its earnings to grow at 3% per year. (a) Calculat

Bahavioral Finance

As a Wall Street professional who has recently received some solid training in behavioral finance through FIN 645, you have been asked by the M&A (Mergers an acquisitions) Roundtable West, a regional networking organization for M&A professionals, to speak at their next annual gathering in San Francisco. Specifically, the confe

Microsoft Article: Analyse motivations behind new strategic action

1) Find an article that describes a firm's new strategic direction such as a merger, strategic alliance, entrance to a new market, or product, etc. - This is the article I found... Article name: Microsoft's Push Into Gesture Technology Website: http://www.heraldtribune.com/article/20101030/ZNYT01/10303002/2055/NEWS?Title=M

Acquisition of Land and Building for Stock & Cash

Valdilla's Music Store acquired Land and old buildling in exchange for 50,000 shares of its common stock, par $0.50 and cash of $80,000. The auditor ascertains that the company's stock was selling for $15 per share when the purchase was made. The following additional costs were incurred to complete the transaction: Legal

Acquisition of Intangible Assets

Transactions during 2011 of the newly organized Menlove Corporation included the following: 2-Jan Paid legal fees of $15,000 and stock certificates costs of $8,300 to complete organization of the corporation. 15-Jan Hired a clown to stand in front of the corporate office for two weeks and hand out pamphle

Acquisition Strategy for Cisco's connections

See attached file. Acquisition Strategy For Cisco Explain: 1. Identify at least two companies in different industries that are using acquisitions to strengthen their market positions. 2. Explain how these acquisitions enhanced the acquiring companies' resource strengths and competitive capabilities.

Acquisition Project Research: Volkswagen Example

Please respond to the questions below and cite your sources: The idea of the project is for Volkswagen to acquire Ford and Fiat in Brazil. Volkswagen, Fiat, GM and Ford account for 80% of the Brazilian auto market, so if any of those companies come together, they will be the leader by far. - Conduct a research for an acqu