Motives of mergers & Acquisition

Raider theory

Private Equity funds no strategic purpose

tansfer the wealth
lower vauations than the market value
TC listed company not possible

this trend is changing

Exchange ratio/swap ratio

TC value status quo

0 value of control
0 value of synergy acquisition

ststus quo valuation 2110.41 mn $

optimally managed firms value 4531.59
value of synergy 2432.08

Total value of TC= 6963.67

debt 1006 mn $
no. of shares o/s in TC 146.789 mn

value/share of TC? 40.586624338336 $/share

equity value/share (firm value+cash-debt)/no. of equity share o/s

modes of payment for an acquisition

floor or ceiling for offering to tc

bid= 40.586624338336 Tc accepts

wealth created for AC? 0 no wealth creted

30.58 wealth cretaed 10$

32.5
TC 37
38

determine actual acquisition price

1 no of bidders large acquisition price will be high
2 control over scarrcity of resource if TC has control over scarece resource ac rice will be high
3 wether Tc is listed or not floor price determined SEBI SAST act
s than the market value unlisted company
not possible acquisition price is regulated by SEBI

AC shareholders
will be high