ALCOA ALUMINUM EASILY OVERWHELMS

REYNOLDS’ TAKEOVER DEFENSES

Student Name Student ID

Manikayya Nayyar 200201038
Pandit Akash 200201050
Pankhuri Singhal 200201051
Rishav Garg 200201060
Tarun Bhushan 200201085
1. What was the dollar value of the purchase price Alcoa offered to pay for Reynolds?

5.8 Billion was offered by Alcoa to Reynolds.

2. Speculate as to why Alcoa wanted to pursue initially a friendly rather than hostile
approach?

Once the financial situation of Reynolds was poor therefore if hostile takeover was done
it would damage the financial situation further.

3. Describe the various takeover tactics Alcoa employed (or threatened) in its
successful takeover of Reynolds. Speculate as to why these tactics may have been
employed (or threatened) by Alcoa?

In a hostile takeover the acquirer company believes that the acquiree company e
mite undervalued or want the access to the brand operations and technology of the
acquiree and they are strategic moves in order to effect the change on a company's
operations

4. Why did the Reynolds’ board reject the initial offer only to accept the bid two weeks
later?

Because its takeover defense was weak, so when it rejected the offer, Alcoa reached the
shareholders of Reynolds to pursue them in dismantling the board which in turn
dismantled the takeover defense of Reynolds.
5. What is the purpose of the breakup fee?
In acquisition deals, a breakup fee is used as leverage for the seller against backing
out of the contract to sell to the buyer.