Indian Institute of Management, Udaipur

Masters in Business Administration

Year 2018-19
Mergers, Acquisition & Corporate Restructuring

Credit: 4 Term : V
Instructor: Prof. Utkarsh Majmudar
Email : utkarsh.majmudar@iimu.ac.in

Objectives
Industrial maps across the market economies around the world have been constantly
redrawn over the years through mergers, acquisitions, divestments, and other forms of
corporate restructuring. The pressure to globalize and internationalize, emergence of
economic unions, maturing markets, and intense competition have given a fresh fillip to
M&A activity around the globe.

With the Indian industry opening up to the global competition, we are witnessing a spate
of mergers, acquisitions, and strategic alliances for corporate restructuring and renewal.
Thus, it is imperative for the participants understand the M&A activity, its process and
impact.

This course seeks to:

1. facilitate participants to train a focus on corporate growth and renewal strategies
(expansion and diversification) through mergers, acquisitions, and divestments;
2. create a good understanding of valuation methods and issues;
3. familiarize participants with target selection and integration issues;
4. sensitize participants to various forms of restructuring such as mergers, takeovers,
demergers, LBOs, etc.
5. provide an overview of the capital market, and accounting related issues; and
6. facilitate examination of the working of the market for corporate control.

The context of the course is principally US/international though the concepts are equally
applicable in the Indian context.

Pre-requisites

The course assumes that you are conversant with basic economics, finance and strategy
courses. A course on valuation is desirable though not essential. This course is basically
rooted in the Finance stream and hence involves a lot of number crunching. However,
numbers are only a means to an end. Thus, participants will also be thrown into situations
of great ambiguity.

Pedagogy

The course will use a mix of lectures, cases, exercises and a project.
Textbook
Mergers, Acquisitions and Other Restructuring Activities by DePamphilis, Elsevier;
Eighth edition (2016)

Also selected articles, papers and chapters from books would be provided to the students.

Other books

Takeovers, Restructuring and Corporate Governance by J Fred Weston, Mark L.

Mitchell and J Harold Mulherin, Pearson Education (New Delhi) Fourth Edition

Mergers, Acquisitions and Corporate Restructuring, by Patrick Gaughan, Wiley

International, 2016 (Sixth Edition)

Applied Mergers and Acquisitions, by Robert Bruner, Wiley International, 2004

Investment Banking: Valuation, Leveraged buyouts, and Mergers & Acquisitions by

Rosenbaum and Pearl, Wiley Finance, Second edition, 2015

Creating Value from Mergers and Acquisitions by Sudi Sudarsanam, Pearson, 2016

Articles
Articles will be drawn from Harvard Business Review, McKinsey Quarterly, and other
journals of repute.

Evaluation

Quizzes 15%
Individual Case Assignment 15%
Group Project 30%
End-term 40%
Total 100%

Session-wise Details

Session Topic
1 The Merger Drama (Movie: Other People’s Money)
[Requires longer session]
2 Introduction to Mergers & Acquisitions
Read: Chapter 1
Note: The Modern Industrial Revolution, Exit and failure
of Internal Control Systems (Journal of Applied Corporate
Finance)
Note: The Company Sale Process (HBS)
Article: The New M&A Playbook (HBR)
3 Takeover Defences
 Read: Chapter 3 pages 82-105
Note: An Overview of Takeover Defence by Ruback
Case: The Acquisition of Consolidated Rail
Corporation (A)
4 Accounting for M&A
Read: Chapter 12 pages 438-447
5 Accretion/Dilution Analysis
Synergies, Liquidity and Control
Read:
Chapters
Note: Evaluating M&A Deal: Accretion Vs Dilution of
EPS (HBS)
Note: Evaluating M&A Deal: Introduction to Deal NPV
(HBS)
Quiz
6 Valuation – an overview
Read: Chapter 7
Trading and Transaction comps: A practical approach
Read: Chapter 1 and 2 of Rosenbaum and Pearl
7 Valuation Roundup
Case: HJ Heinz M&A
8 Leveraged Buyout – Leveraged Finance & Valuation
Read: Chapter 13, 14
Note: Technical Note on LBO Valuation (A and B).
[HBS]
Note: Valuation Techniques in Private Equity: LBO
Model (HBS)
Note: Valuation Techniques in Private Equity: LBO
Model (HBS)
Note: Note on Capital Cash Flow Valuation (HBS)
Case: RJR Nabisco
9 Leveraged Buyout—Forces
Case: Revco
Quiz
10 Leveraged recapitalization
Case: Sealed Air
11 Restructuring: Spin-offs and restructuring alternatives
Read: Chapter 16
Case: Humana Inc
12 Deal Structuring and related issues
Read: Chapter 11,12
Note: Cash or Stock? The Trade-offs for Buyers and
Sellers in Mergers and Acquisitions. [HBR]
13 Bidding strategies
Note: Note on Risk Arbitrage
Case: MCI Takeover Battle: Verizon Versus Qwest
14 Deal Structuring
 Case: Deutsche Bank Securities: Financing the acquisition
of Consolidated Supply S.A.
15 Due diligence and other issues
Quiz
16 Deal Negotiation
Read: Chapter 5 pages 173-176

Role Play Case:

Chrysler Corporation: Negotiations between Chrysler
Corporation and Daimler Benz A.G. (half the class)

Daimler Benz AG: Negotiations between Chrysler

Corporation and Daimler Benz AG (half the class)
17 Integration Issues
Read: Chapter 6
Case: DaimlerChrysler Post-Merger Integration (A)
Read: How GE Integrates its Acquisitions
Read: How to Make Your Post-Merger Reorg a Success
Read: After a Merger, Don't Let "Us vs. Them" Thinking
Ruin the Company
18 Discussion on Recent Mergers
Relevant material on company websites
19 Project presentations
20 Project presentations
Conclusion and integration
Chapters refer to chapters from the book: Mergers, Acquisitions and Other Restructuring Activities by
DePamphilis, Elsevier; Seventh edition (2014)

Quizzes (tentative schedule): Three of which best two quizzes considered --7.5 marks
each. No makeups.
Sessions 5, 10 and 15
The quizzes may be administered outside of class session.

Group Case analysis 15 marks

Comprehensive case: Vodafone Airtouch’s bid for Mannesmann

Project
The project addresses a goal of the course—to develop your ability to conceive and
design a proposed deal. It exercises the broad range of skills developed in this course.
You (in teams of four) would be required to prepare a deal concept proposal as if you
were an internal corporate development officer for the buyer firm. A company would be
assigned to each team and you would need to pick a target for which some strong
strategic rationale acquire exists. You would be required to prepare a briefing book (max.
20 pages) covering strategic rationale for the deal, target valuation, suggest a deal design
and survey issues likely to be encountered in negotiation and integration of the firms. The
team must make a presentation and convince the instructor to go forward with the
proposed transaction.
End term examination
The end term exam will be closed book and will be a maximum of 2 hours 30 minutes
long. You will be supplied with a formula sheet to help you in the exam.