Mergers and Acquisitions 3rd Set of Assignment Solution

Assignment Solution Section A

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1              Why cross-border takeovers are becoming popular?

2              Take some real corporate example or some hypothetical situation, explain the concept and working of Employee Buyouts?

3              Describe some post merger obstacles especially in Indian Context?

4              Explain the objectives, significance and types of corporate restructuing?

5              Differenciate between Friendly and Hostile takeover?

6              Differenciate between LBOs and MBOs with suitable examples?

7              Critically explain some potential adverse effects of mergers?

8              Explain the concept of merger? What are the thee prominent types of merges practised throughout the globe?

 

Case Study

 

Myntra Acquired Jabong

 

Flipkart-owned Myntra acquired Jabong from Global Fashion Group, a move that will mark further consolidation in India’s booming e-commerce industry. Myntra, which itself was acquired by Flipkart in 2014 in an estimated Rs 2,000 crore deal, will have access to a combined base of 15 million monthly active users. “The acquisition of Jabong further strengthens Flipkart Group’s position as the undisputed leader in Fashion and Lifestyle segment in India. Jabong is among India’s major fashion multi-brand e-store with more than 1,500 on-trend international high-street brands, sports labels, Indian ethnic and designer labels and over 1,50,000 styles from over a thousand sellers,” Myntra said in a statement.

 

Here are the highlights of the Flipkart-Jabong deal

• Global Fashion Group, as part of its effort to accelerate profits, has sold Jabong to Flipkart Group for $70 million in cash
• The deal comes after the GFG Board concluded that for Jabong to be a success, it had to tie up with a local player
• As of March 31, 2016, Jabong represented 13 per cent of GFG’s net revenue and ca. 22 per cent of adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) loss.
• For the 12 months ending March 31, 2016, GFG generated €977m in Net Revenues and €(255)m in Adjusted EBITDA.
• Romain Voog, CEO of GFG said: Through the sale of Jabong, we are achieving a milestone in our strategy to refocus and invest in our core markets that show both, significant growth and revenue potential but also a clear and predictable path to profitability.
• Myntra CEO Ananth Narayanan said: “The acquisition of Jabong is a natural step in our journey to be India’s largest fashion platform. We see significant synergies between the two companies especially on brand relationships and consumer experience. We look forward to working with the talented Jabong team to shape the future of fashion and lifestyle ecommerce in India.”
• According to the Internet and Mobile Association of India, e-tailing has grown at 57 per cent year-on-year, moving from Rs 24,046 crore to Rs 37,689 crore between the December 2014 and December 2015. This is further estimated to touch Rs 72,639 crore by end of 2016.
• Research Director at Gartner Sandy Shen said the move will help Flipkart further penetrate into the fashion category and keep rival Amazon at bay. “Fashion (esp. women’s fashion) is a top category on e-commerce platforms in terms of transaction volume and growth, and also one of the most competitive due to lots of brands and manufacturers. The acquisition of fashion platforms is a move for Flipkart to not only further penetrate into the red-hot category but also maintain its leadership position in the market and keep Amazon at bay.”

 

Q.No 1: What the case is all about?

Q.No 2: What will you comment on the said merger?

Q.No 3: What would you suggest to Flipkat about the smooth fucntioning of the company especially after Jabong merger?

 

Section C

 

Q1. The amount which is available if the assets of the business are sold off and converted to cash is …………….. Value.

(A): Liquidation

(B): Vertical

(C): Horizontal

(D): Plain

 

Q2. The price at which an option may be exercised. This is also known as the strike price.

(A): Exercise Price

(B): Offensive Price

(C): Defensive Price

(D): Double Price

 

3. The target company attempts to take over the hostile raider is ………… strategy.

(A): Pacman

(B): Tender Offer

(C): Push Value

(D): Turnkey Offer

 

Q4. It is a merger of two competing firms, which are at same stage of industrial process.

(A): Vertical

(B): Horizontal

(C): Plain

(D): Solid

 

Q5. The purchase of the controlling interest or ownership of another company.

(A): Merger

(B): Takeover

(C): Acquisition

(D): None

 

Q6. A recurring pattern of expansion and contraction in the economy. The average cycle is three to four years.

(A): Product Cycle

(B): Business Cycle

(C): Green Cycle

(D): Vanila Cycle

 

7. The reduction of earnings, or the value of a stock, that can occur in a merger when more shares are issued; or with conversion of convertible securities into common stock.

(A): Takeover

(B): Merger

(C): Seperation

(D): Dilution

 

Q8. An acquirer may not offer the proposal to acquire the target company’s undertaking, but may silently and unilaterally pursue efforts to gain controlling interest in it against the wishes of the management.

(A): Merger

(B): Reconstruction

(C): Acquisition

(D): Hostile

 

Q9. In this, a company transfers its undertaking and its assets to a new company in consideration of the issue of the new company’s shares to the first company’s members.

(A): Merger

(B): Reconstruction

(C): Acquisition

(D): Turnkey Offer

 

10. The target company might issue convertible securities which are converted into equity to deter the efforts of offeror; such conversion dilutes the bidder’s shares and discourages acquisition is ………….. Strategy.

(A): Green

(B): Poison Pill

(C): Yellow

(D): Orange

 

Q11. This is an exchange rate of the shares of the companies that would undergo a merger. This is calculated by the valuation of various assets and liabilities of the merging companies is ……….. Ratio.

(A): Put

(B): Call

(C): Right

(D): Swap

 

Q12. It is the intention of the acquirer reflected in the action of acquiring the shares of the Target company.

(A): Takeover Bid

(B): Tender Offer

(C): Push Value

(D): Turnkey Offer

 

13. The acquirer pursues takeover (without consent of the acquiree) by making a tender offer directly to shareholders of the target company to sell their shares. This offer is often made for cash.

(A): Begging

(B): Tender Offer

(C): Push Value

(D): Turnkey Offer

 

14. This would give backward integration to the company to assimilate the sources of supply and forward integration towards the market.

(A): Horizontal

(B): Stapple

(C): Vertical

(D): Inertia

 

Q15. The original company which has split into several companies after division, could be wound up voluntarily is …….. Winding.

(A): Stop

(B): Voluntarily

(C): Sudden

(D): Quick

 

Q16. A ………………. is an alternative buyer who enters the fray when the target company is raided by a hostile suitor.

(A): Radar

(B): Wealthy Fish

(C): white knight

(D): Crown

 

17. Things of value owned by a company are called ………………

(A): Assets

(B): Liabilities

(C): Capital

(D): Debt

 

Q18. WACC stands for …………….. average cost of capital.

(A): Woo

(B): Weighted

(C): Warden

(D): Wikipedia

 

19. EBIT stands fo Earnings Before ………………. and Taxes

(A): Income

(B): Inward income

(C): Interest

(D): Inertia

 

Q20. Close monitoring of the stock market activity in a company’s shares by a shark watcher appointed by the company for that purpose is …………. Alert.

(A): Supevision

(B): Radar

(C): Control

(D): Check

 

Q21. A person, a group, or a company seeking to take over another company, known as the target company is called ……………. Company.

(A): Parent

(B): Hostile

(C): Subsidiary

(D): Predator

 

Q22. NPV stands for Net ………….. Value.

(A): Past

(B): Present

(C): People

(D): Pedetermined

 

Q23. A company which owns or controls subsidiary companies by means of owning a majority of voting shares is called ………….. Company.

(A): Parent

(B): Mother

(C): Father

(D): Uncle

 

24. A strategy of survival in the takeover game, named after a popular game in the US in the early 1980s, in which a character which does not swallow its opponents is itself consumed is …………… defence.

(A): Stapler

(B): Stuff

(C): Pac Man

(D): Pac Dock

 

Q25. A very large takeover bid is ……………….. Bid.

(A): Small

(B): Omni

(C): Nuvo

(D): Mega

 

26. An employment contract offered to company directors and senior management which guarantees to pay extensive benefits if the executives is made to leave the company is …………. Parashute.

(A): Red

(B): Blue

(C): Golden

(D): Green

 

27. A takeover offer so attractive that the target company can not refuse s called ……. Offer..

(A): God Father

(B): God Mother

(C): Uncle

(D): Umbrella

 

Q28. It is blending of two or more companies. The shareholders of each company become the shareholders of the company which is undertaking the activity.

(A): Takeover

(B): Acquisition

(C): Takeover

(D): Amalgamation

 

Q29. An amalgamation of companies in two or more different industries.

(A): Concentric

(B): Vertical

(C): Horizontal

(D): Conglomerate

 

Q30. The directors of a threatened company may acquire another company for shares as a defensive measure to forestall the unwelcome takeover bid.

(A): Horizontal

(B): Vertical

(C): Defensice Merger

(D): Plain

 

31. The sale, for cash or for securities, of a segment of a company to a third party which is an outsider.

(A): Merger

(B): Divestiture

(C): Acquisition

(D): Turnkey Offer

 

32. It is a process by which a company acquires another company that make use of its products to manufacture finished goods is ……………. Integration.

(A): Backward

(B): Vertical

(C): Forward

(D): horizontal

 

Q33. This term refers to the process where a firm buys and invests in another and employs their managers and officials to administer the new established business identity.

(A): MBO

(B): LBO

(C): Management Buy in

(D): FIFO

 

Q34. This occurs when equity shares of a subsidiary company are distributed to some of the parent company’s shareholders in exchange for their holdings in parent company.

(A): Clash

(B): Harmony

(C): Divide

(D): Split Off

 

Q35. This is the acquisition of a company by its management personnel is …………. Buyout?

(A): MBO

(B): FIFO

(C): LIFO

(D): Leveraged

 

36. Goodwill, patents, trademarks, unamortized debt discounts and deferred charges are ………….. Assets.

(A):  Tangible

(B): Swap

(C): Intangible

(D):  Solid

 

37. A covenant allowing the bond holder to demand repayment in the event of a hostile takeover.

(A): Poison Put

(B): Takeover Bid

(C): Tender Offer

(D): Push Value

 

Q38. The company which is being merged or taken over by the other company.

(A): Lessee

(B): Acquiree

(C): Mergee

(D): Take Overee

 

39. The fusion of two companies in which both the companies lose their identity and form a new company. Shareholders get the shares of the new company.

(A): Merger

(B): Acquisition

(C): Consolidation

(D): Divestiture

 

Q40. These precious assets attract the raider to bid for the company’s control.

(A): Crown Jewels

(B): Pac Man

(C): Spider Man

(D): Angel

Other MBA Assignment Solution

Merger and Acquisitions 1 Solution

Merger and Acquisitions-2 Solution