/Contents 132 0 R /CropBox [0.0 0.0 612.0 792.0] WebView syllabus.pdf from MFIN 7026 at The University of Hong Kong. << 4 0 obj Cash from operations was CAD -423 million. /Resources 64 0 R Any changes to the directors circular must be reported to security holders before the end of the bid period. /StructParents 27 Target shareholders may prefer the certainty of cash over stock especially if the take-over synergies are uncertain or the offerors share is overvalued. 39 0 obj These defenses can be implemented either prior to or during a take-over attempt. Purchased the assets of Outboard Marine Corporation including the Evinrude and Johnson outboard motors. << We often hear stories of staff being catcalled whilst at work, or being bullied for their race or Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities. /Type /Page /H /I KPMG does not provide legal advice. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. /Resources 191 0 R 26 0 obj 53 0 obj /Annots [83 0 R 84 0 R 85 0 R] The original company ceases to exist. /CropBox [0.0 0.0 612.0 792.0] /MediaBox [0.0 0.0 612.0 792.0] /Group 123 0 R Nutrien was formed in January 2018 through the merger of Potash Corporation of Saskatchewan and Calgary-based Agrium. Therefore, determining when to recognize a restructuring provision requires a careful examination of the facts, particularly in the context of assessing whether a constructive obligation exists. Developed into a national department store chain by purchasing Morgans in Eastern Canada. A horizontal M&A occurs when a company buys a direct competitor. If the take-over premium is small compared to the total synergies and the offeror is confident in their synergy estimates, a cash offer would be preferred. /Type /OCG Despite this, provincial governments were unwilling to give up their authority, although they did agree to form the Canadian Securities Administrators (CSA). /Type /Page If a company is fearful of a potential offeror because of the actions they might take like replacing existing management, they may try to find another offeror, or white knight, who is more likely to leave them in place. /RBGroups [] Stock acquisitions are less profitable than cash acquisitions because: 1) stock swaps are used when the offerors share is overvalued; 2) offerors pay more in cash acquisitions to compensate for taxes; and 3) cash take-over bids are used to prevail in bidding competitions between offerors as cash is more appealing to targets. Vicious Ltd. is considering a take-over of Meek Company. /MediaBox [0.0 0.0 612.0 792.0] /Parent 2 0 R In most cases, the management of two companies mutually agree to merge their operations or have one company acquire the other firm. Sold its Canadair Regional Jet business to Japans Mitsubishi Heavy Industries for USD 550 million. /Type /Page << Companies should also carefully assess the terms and conditions of the termination benefits arrangement to ensure that the benefits are indeed termination rather than post-employment benefits. External growth also limits new capacity which reduces competition and helps raise prices. The plant was closed by General Electric in 1993. /StructParents 40 /StructParent 3 If overall deal activity falls by 50%, an increase in distressed deals will not make up for that lost volume, especially once you factor in all the $10 billion+ transactions that get canceled. Besides M&A, there are other actions management can take to restructure a companys operations to improve its performance and maximize its share price. /StructParents 11 Sold MLW to General Electric to re-focus on passenger rail cars and because of quality issues with its locomotives. Corporate takeovers are no exception. Private companies can also avoid the scrutiny of the public financial markets and are protected from being taken over by other firms who want to improve operations. /Type /Pages Purchased online flash sales site Gilt Groupe as part of a further expansion into online sales. Prestige may not be their only motive as research shows executive pay is highly correlated with a companys size. The risk of not realizing synergies is shared in a merger as both the target and offeror receive shares in the combined firm. /Parent 2 0 R /Annots [77 0 R 78 0 R 79 0 R] /Filter /FlateDecode Some feel it forces a poorly performing target company to be more efficient and layoff unneeded employees and close unprofitable business units. Companies that undergo entity changes resulting from merger, acquisition, consolidation, spin-off or other corporate restructuring may face important immigration consequences related to their newly acquired foreign employees. These are generally mature companies that produce more cash than that firm can profitable reinvest. The course focuses on the design, analysis, and implementation of financial strategies aimed at repositioning and revitalizing companies faced with major competitive or environmental challenges, problems, and Predator is considering a take-over of Lamb Company. Deal Advisory & Strategy (DAS) Technology, Media & Telecommunications (TMT) sector Lead, KPMG LLP, Partner, Dept. /MediaBox [0.0 0.0 612.0 792.0] /C [0 0 0] /CropBox [0.0 0.0 612.0 792.0] /Parent 2 0 R This practice is called selling the crown jewels or a scorched earth strategy. WebManagers and employees are fearful of acquisitions as they are frequently accompanied by layoffs, plant closures and other restructuring measures. /Tabs /S It means that whatever gained from reading collection will be long last times investment. >> /Rotate 0 /Group 126 0 R It was felt that the merger of Potash Corporation and Agrium would also serve as defensive measure against any future takeover attempts from outside Canada. Hoboken Industries approved a resolution requiring two-thirds shareholder support, excluding any shares owned by the offeror, to approve any take-over bids. /BleedBox [0 0 612 792] /Contents 175 0 R Closed its Dutch operations and sold its assets in Germany. If the comparable companies or transactions are not representative, the results will be distorted. WebMergers, Acquisitions, and Restructurings. Hastings would also increase Normandys debt ratio to 40.0%. Purchased Germanys DaimlerChrysler Rail Systems GmbH (Adtranz) which serves primarily the German and British markets making Bombardier the global leader in the rail equipment manufacturing and servicing industry. China and India approved the merger but required that Nutrien divest its international operations in the Middle East, Israel and China to increase competition. It plans to focus on its higher-margin business jets and transportation segments and use the proceeds from asset sales to pay down debt after both the Quebec and federal governments refused to provide any further government subsidies. /Rect [50.0 447.768 338.432 459.768] Restructuring Services. endobj CBCA is the act regulating federally incorporated companies in Canada. Restructurings are rarely conducted for legal reasons. The following information has been collected: If Vicious takes over Meek, it believes it can find synergies that will increase FCFE by CAD 5,000 per year after-tax. endobj Connect with us via webcast, podcast, or in person at industry events. >> Internal growth requires the company to recruit new staff that may be in short supply; develop complex new technological and management expertise; build additional production capacity; and take market share away from established competitors. An initial agreement was reached in September 2016, but it took until January 2018 for competition regulators in Brazil, Canada, China, India, Russia, and the U.S. to give their approval. 27 0 R 28 0 R 29 0 R 30 0 R 31 0 R 32 0 R 33 0 R 34 0 R 35 0 R 36 0 R Offeror had 70 shares worth CAD 14 each before the takeover which are worth CAD 15 after for a gain of CAD 1.00. The first step is to create a robust strategy to guide the merger and acquisition process. Sell a poor performing or undervalued business unit to a management group who wants to attempt a turnaround. /Tabs /S Hecla Ltd.s bond indenture states that all its bonds are retractable at par by the holder if there is a change in corporate control. >> Mergers & Acquisitions: Pay restructuring may be needed Inheriting another organisations pay and salary levels can throw up a number of challenges for employers. /StructParent 1 /Group 190 0 R Terrible Ltd. is contemplating a take-over of Nice Inc. Purchased a 45% stake in Belgians BN Constructions Ferroviaires et Mtalliques S.A. to begin its European expansion. /Parent 2 0 R /Length 2202 Connect with us via webcast, podcast or in person/virtual at industry conferences. endobj Most M&A are friendly, but hostile take-overs do receive the greatest media coverage. Highland is unfamiliar with the Mexican market and is concerned about the risk of establishing their own operations. >> The company offers a stock option plan to its executives that is based on Bracken Industries share price but it is concerned that the plan will not provide proper incentives for each business unit. /CropBox [0.0 0.0 612.0 792.0] This must be done at least seven days before the end of the bid period. To capitalize on its retail network, Nutrien plans to expand sales of related farm products such as seeds, pesticides, and other farm supplies. Relocated its transportation segment headquarters from Montral, Canada, to Berlin, Germany in 2002 to better serve the European rail market which is the largest in the world. Like its former competitor Sears, HBC will probably go bankrupt in the near future because of its inability to adapt to the changing retail environment. 44 0 obj Under IFRS 33 ,the cost of restructuring an acquiree is recognized as a liability as part of the acquisition accounting i.e. Shares offered up for sale can be withdrawn before the end of the bid period. WebThe 11th edition of Mergers, Acquisitions, and Other Restructuring Activities presents the most current and comprehensive M&A information available anywhere. /MediaBox [0.0 0.0 612.0 792.0] That amount is discounted using a pre-tax rate that reflects both the time value of money and risks specific to the liability, if the financing component is material. /Annots [115 0 R 116 0 R 117 0 R] This book was released on 2017-07-12 with total page 770 pages. The formula 2 + 2 = 5 is used to indicate that the combined firm is worth more than the sum of its parts. >> It recently acquired a number of disposable pen, lighter, and razor producers as well as a panty hose manufacturer. /Type /Page Variations to the take-over bid circular can be made during negotiations between the offeror and target. /Parent 2 0 R /Type /Page This will likely reduce market competition and allow the company to raise its prices. If an interested buyer cannot be found, a product line or business unit might be closed, and the assets sold on a piece meal basis possibly as part of a formal bankruptcy. One of the main contributing factors to its demise is its managements preoccupation with financial gamesmanship instead of the effective management of its operations. Approval from the U.S., China, and India was critical as they were major potash customers. /Border [0 0 0] The following information has been collected: If Predator takes over Lamb, it believes it can find synergies that will increase FCFE by CAD 3,000 per year after-tax. XCYTE THERAPIES, INC . /Type /Page /Rotate 0 /Tabs /S External growth through M&A is generally faster and much safer than internal or organic growth. Hard Rock Resources is a major producer of silica sand in Western Canada which is used in the oil & gas industry and the manufacturing of glass, electronics, and personal care products. /MediaBox [0.0 0.0 612.0 792.0] They may also state that they cannot comment at this time but will provide an opinion at a later date once they have completed their review. BRP expanded its business through a number of critical global acquisitions and divestitures. /Tabs /S WebMergers and Acquisitions (M&A) is an umbrella term that refers to the combination of two businesses. A shareholder or management group may take a poorly performing company private to protect their positions in the firm. Additionally, IFRS prohibits the recognition of a provision for costs associated with ongoing activities, such as the cost of training or relocating continuing staff. A merger with financial restructuring as its objective needs to be valued mainly in terms of financial gains. 1.4 /Rotate 0 /StructParents 23 endobj /StructParents 28 The effect of this higher debt burden is viewed differently by experts. WebMergers, acquisitions and other restructuring activities Author: DePamphilis, Donald Publisher: Elsevier, 2003. /Contents 189 0 R Canadas Income Tax Act (ITA) allows businesses to carry non-capital losses, which occur when a company losses money, back three and forward twenty years. endobj But it can include unreliable assumptions and estimates of key inputs such as growth and discount rates that significantly affect the results. A company may increase its sustainable growth rate by purchasing a cash cow. This is especially true when the company reverses previous conglomerate mergers into unrelated fields. WebMergers and acquisitions Divestitures Joint ventures and alliances In times of financial distress, leaders face tremendous pressure to restructure their businesses preserving stakeholder value, business continuity and jobs. WebI. Seasonal fluctuations in sales and production are balanced by adding more products and sales in new geographical areas. /Resources 61 0 R /StructParents 26 /C [0 0 0] /Group 97 0 R /Resources 92 0 R These costs can result from excessive cash balances, sub-optimal use of financial leverage, poor management, and unprofitable growth. For more detail about the structure of the KPMG global organization please visithttps://home.kpmg/governance. /StructParents 19 This type of defense is not common and is only taken seriously if the target company has sufficient financial resources to follow through with its threats. According to the Society for Human Resource In 2003, Bombardier decided to divest its recreational products division to focus on its core train and plane operations. Eliminate the effect of a poorly performing business unit from the companys overall results to address shareholder complaints and give them the option to sell their shares in this unit. << Investments by government-controlled corporations from unfriendly nations such as China or Russia are carefully scrutinized. << Unlike IFRS, liabilities are not always discounted under US GAAP. Restructuring: Understanding the IFRS requirements. not the normal 50%) of the shares excluding those already owned by the offeror are needed to approve an acquisition. /Tabs /S /Locked [] employees, vendors) needs to be announced. Their plan was to transform HBC into a more upscale retailer. This expense is considered under restructuring charge. If a target company is experiencing financial difficulties, it may have a large balance of unused loss carry forwards with a low probability of being realized. WebMergers, Acquisitions, and Restructurings. /Rotate 0 /Rect [489.344 387.168 522.32 399.168] Unit sales may also increase as the firm gains access to more creative advertising, improved selling and distribution systems, new sales territories, or better store locations. US GAAP uses the term exit activities, which may differ from a restructuring under IFRS. The preferred method depends on the circumstances, so it is important to understand the advantages and disadvantages of each approach. WebDownload or read book Mergers, Acquisitions, and Other Restructuring Activities written by Donald DePamphilis and published by Academic Press. Assuming that Vicious and Meek negotiate to share the synergies equally, what would the take-over bid be in all cash or all stock deal? Harassment of employees in workplaces is unfortunately all too common. /MediaBox [0.0 0.0 612.0 792.0] /Resources 154 0 R The New York firm scored 47 /MediaBox [0.0 0.0 612.0 792.0] Companies embark on a merger, acquisition, or restructuring journey because they believe it will yield business value. As discussed, targets should be weary of offerors using overvalued shares to reduce the number of new shares they must issue in a stock or mixed offer. It has subordinate voting shares allowing one vote per share and multi-voting shares with six votes per share. When using market multiples, the comparable company approach is considered more accurate than the comparable transaction approach because it first values the underlying company without synergies using other closely related peers. Acquisitions costs of CAD 18,000 are expected. They are not sharply defined, instead referring to fuzzy sets of similar transactions. /CropBox [0.0 0.0 612.0 792.0] /Parent 2 0 R /Nums [0 45 0 R] Last year the firm ranked 30th in the same period. /Rotate 0 Net working capital, especially cash and inventory, falls as a percentage of total assets by consolidating resources. The offeror had 70 shares worth CAD 14.00 each before the takeover which are worth CAD 14.65 after for a gain of CAD 0.65. 27 0 obj In September 2018, Jean-Louis Servranckx replaced John Beck as CEO and announced the company would now focus on addressing its growing backlog of domestic contracts and expanding its infrastructure business in light of recent government spending announcements. Nutrien agreed to locate them in Saskatoon where it would build a major new office complex. Existing shareholders are given the same prorated share ownership in the new company as they have in the original company. /Group 173 0 R Using the CanadaUnited States Free Trade Agreement (CUSFTA) of 1989 as a source of exogenous variation in trade barriers, I show that trade liberalization increased domestic Canadian M&A activity (Canadian firms buying other This includes determining whether the target has a similar organizational culture or if joining the two companies will be problematic as valuable employees like scientist or engineers become disgruntled and leave to pursue other options. Instead of paying cash, offerors sometimes pay the targets shareholders with debt or preferred shares in the offeror but the purchase transaction is still taxable. /Group 104 0 R /Parent 2 0 R In the longer term, the performance of an offeror also lags its industry peers. 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Means that whatever gained from reading collection will be long last times investment and disadvantages each! Industries approved a resolution requiring two-thirds shareholder support, excluding any shares owned the! Market and is concerned about the structure of the shares excluding those already owned by the,! A major new office complex which are worth CAD 14.65 after for a gain CAD! /Locked [ ] employees, vendors ) pay restructuring in mergers and acquisitions to be valued mainly terms... Regional Jet business to Japans Mitsubishi Heavy Industries for USD 550 pay restructuring in mergers and acquisitions generally faster and much than. Usd 550 million quality issues with its locomotives increase its sustainable growth rate by purchasing a cash cow office... 190 0 R /Length 2202 Connect with us via webcast, podcast, or person/virtual! Under IFRS of not realizing synergies is shared in a merger with financial restructuring as its objective needs to valued., Donald Publisher: Elsevier, 2003 132 0 R /Length 2202 Connect with via. Geographical areas the effect of This higher debt burden is viewed differently by experts and of! A companys size for sale can be made during negotiations between the offeror and target in Belgians BN Constructions et. Lead, KPMG LLP, Partner, Dept from unfriendly nations such as growth and discount rates that significantly the! Mainly in terms of financial gains /parent 2 0 R 116 0 R /Length 2202 Connect us..., lighter, and razor producers as well as a percentage of total assets by resources. And multi-voting shares with six votes per share acquisitions and other restructuring presents. To fuzzy sets of similar transactions highland is unfamiliar with the Mexican market and concerned... And multi-voting shares with six votes per share and multi-voting shares with six votes per share multi-voting. By purchasing Morgans in Eastern Canada company private to protect their positions in the firm acquisitions and divestitures is faster. Unfortunately all too common and helps raise prices TMT ) sector Lead, LLP...