AQ064-3-3-CFIN Individual Assignment Page 1 of 2

This assignment is an individual assignment and is worth 25% of your total assessment. Your
assignment must be typewritten using font Times New Roman size 12, 1.5 spacing, justified
alignment, 1inch margin on both sides of each page, and properly bound. You are required to use
Harvard Referencing if any. The cover page of the assignment must include name, student ID,
and subject code. The number of words should not be less than 2,000 words and should not be
more than 2,500 words, marks will be penalised accordingly if the number of words is lesser or
exceed from the given instructions. Please submit the assignment via Moodle and convert your
document into a PDF file before upload. Submit before 3rd August 2020 by 7.00 pm

QUESTION
MERGERS AND ACQUISITION

Multinational corporations seek rapid growth through mergers and acquisitions (M&A) is a
recent global trend. Prominent cases of M&As since the 1980s include KKR’s $25 billion
acquisition of RJR Nabisco, SoCal’s acquisition of Gulf Oil to form Chevron, and the bitter
battle between QVC and Viacom for Paramount Communications.
Unfortunately, not all M&As have produced positive results for the acquiring company. Faced
with intense competition from Samsung and Sony-Ericsson, the world-renowned electronics
maker BenQ took over Siemens’ mobile phone unit in 2005. BenQ had hoped that the synergistic
combination of Siemens’ global brand recognition and technological know-how with BenQ’s
manufacturing capabilities and cost-control measures would boost the global sales of its mobile
phones and increase its market share to at least 10%. However, one condition stipulated by
Siemens was that BenQ had to continue operating the mobile phone manufacturing facilities in
Germany after the acquisition. This proved to be a tough challenge for BenQ. While trimming
operating expenses and manufacturing costs to improve its mobile phone business profit
margins, BenQ faced obstacles in propping up the new unit’s rapidly shrinking market share. The
delay in launching new products caused BenQ to lose market share to its main rivals Nokia and
Motorola as the mobile phone market is a high volume business.
On October 2, 2006, BenQ chairman Lee Kun-Yao announced that BenQ would stop funding its
German subsidiary. It was a “painful” decision, but one that had to be made. BenQ had booked
losses of 600 million ($760.8million) from BenQ Mobile since the takeover of Siemens unit.
A business merger is a strategy used for the rapid growth of an enterprise. However, choosing
the right strategy and target is totally important. A merger plan must cover the merger process,
merger prices, payment method, financial planning, and organizational adjustment. A
comprehensive review must be made before the merger takes place to make sure that business
value can be created after the merger.

a. Write an overview of Mergers and Acquisition (M&A).

(Hint : it is required to define and explain the process and role of M&A)
(10 marks)

b. Do mergers create value for the organisation? Explain the advantages and disadvantages
of Mergers and Acquisition (M&A).

APU Level 3 Asia Pacific University of Technology & Innovation 20200701

AQ064-3-3-CFIN Individual Assignment Page 2 of 2

(Hint : it is required to analyse M&A as a tool to create value and explain the pros and
cons of M&A)
(20 marks)

c. Critically examine one organisation which failed to use M&A as a tool to create value in
organization.
(Hint: your answer should be rationale, practical and it is required to use knowledge of
financial management to add value on your analysis and recommendation)
(20 marks)

To attempt this assignment successfully, students need to display a wide range of Corporate
Finance tools and required to apply knowledge learned throughout the subject. Every question
should be assessed critically and rationally. References from books, articles, or academic
journals are required and marks will be reducing if none of the conditions apply. Turnitin
similarity index will be used to check the plagiarism level, the maximum similarity index
allowed is 30%. Any inquiries concerning the assignment should be put up one week before the
submission.

(Total = 50 marks)

END OF QUESTIONS

APU Level 3 Asia Pacific University of Technology & Innovation 20200701