Essay Title: 

Mergers & Acquisitions

April 3, 2016 | Author: | Posted in finance, mathematics and economics

” Mergers Acquisitions “1 “Percentage Ownership “shares “Exchange “shares in “out “ratio “Merged company “Q-Star “155 .5 “0 .5781 “85 .525 “0 .4253 “Blue Horizon “105 .5 “1 “105 .5 “0 .5747 “191 .025 “1 “2 “Acquisition Premium “Last “close “Q-star “18 “Blue Horizon “36 .5 “shares “Target cash consideration per “share “0 “0 “Target stock consideration per “share “0 .5781 “20 .075 “1 “per share “Total “Acquisition premium (20 .08-18 .00 “2 .08 “0 .1156 “323 .44 “The strengths and weaknesses of the calculation and analysis “The strength of the above analysis is that the percentage ownership calculation shows that [banner_entry_middle]

“Blue Horizon the Acquiring company has 55 .2 compared to Q-Star 44 .8 . That is the “Acquiring company can have more control of the New merged company than the Q-star “and may benefit more from the merger synergies if realized than the Q-star company “In addition the acquiring premium of 323 .44 as calculated above is the minimum synergy “the merged company must realize so that the Blue company the acquirer can benefit from “the deal assuming the pre-deal values of Blue Horizon and Q-star is not “under or over valued “The weakness of the above calculation is that it do not provide much information about “how the terms of the deal affects the split of values between the two companies “As well it do not recognize the complex relationship between deal terms and synergies “In addition it assumes the pre-deal values are not over or under valued . However in “reality this may happen and there fore its analysis is too simple and further analysis “and information is necessary to fully understand the issues affecting such deals “Evaluation of control of the New company based on the above calculation and analysis “As the percentage of ownership is more for the Blue Horizon than Q-star it may be able to “have more control in the management and operation of the company than the Q-star as it “has more ownership of the New company . However the Q-atar as partner and a sustancial “shareholder by this deal compromises it control than by other deals of paying by cash or a “combination of cash and shares as a consideration than by shares alone “Potential synergies of merger “Synergies are mutually advantages combinations .There are endless range of possible synergies “However the most important synergies or potential synergies in this context is the potential for “new markets and customers as well as improvrd growth prospects as this is the main synergy “expected by the management of Blue Horizon if they merge with Q-star “Potential challenges “The merger may not realize the expected synergies . This may be due to a variety “of reasons . The most important is the ability to identify operations and markets “which will maximize the synergies and these companies may not have the managerial “skills as well as incompatibity of organizational cultures and incompatible technology “and problems of control and management responsibilies between the two companies “In addition there may be excessive conflicts… [banner_entry_footer]

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