, 2011 Room: Bus 1-06

W

INTER

, 2011 Room: Bus 1-06

FIN673 M

ERGERS

, R

ESTRUCTURINGS AND

C

ORPORATE

C

ONTROL

D

ESCRIPTION OF COURSE

Financial and economic aspects of corporate mergers, asset restructuring, downsizing, and financial restructuring are examined. Particular attention is paid to valuation and shareholder wealth effects of mergers. Relations between corporate ownership and financial structure and performance are investigated. The course also examines anti-takeover devices and their effect on corporate performance. Finally, international mergers are examined from a strategic perspective.

I

NSTRUCTOR

Vikas Mehrotra

4-20J Business Building 780 492 2457

[email protected]

Office Hours: 5p-6p, Tuesdays and by appointment (please contact Keltie Tolmie at 780.492.2457 or [email protected] )

T

EXTBOOK

Takeovers, Restructurings, and Corporate Governance (Fourth Edition, 2004), by Weston, Mitchell, and Mulherin.

G

RADING

Grading will be based on a combination of mid-term and final exams, case presentation, case report, and class participation. The following scheme summarizes the marks distribution. Case presentations and reports are team efforts. Exams are individual efforts.

Mid-term Exam 35

Case presentation & Report 20

Class participation 10

Final Exam 35

TOTAL 100

R

ULES OF THE

G

AME

Rule 1 Make-up Exams: If you miss the mid-term exam, I will put its weight on the final exam. If you miss the final exam, a make-up final exam will be scheduled for later, but not before August 2010.

Rule 2 Exam Aids: You are allowed to carry a one-page (8½x11) sheet of paper with as many formulas as you can cram onto it. You may write on both sides. Personal computers (notebooks, laptops etc) are not allowed in exams.

Rule 3 Email Policy: The instructor will respond to emails within two business days under normal circumstances.

Rule 4a Case presentations: All cases must be presented using PowerPoint slides. Plan to spend a maximum of 20 minutes. Budget 15 minutes for presentation and 5 minutes for Q&A. Contact the instructor for a list of suggested issues to address in the case.

Rule 4b Case reports: All case reports must be submitted in print form. Case reports are due on the date of presentation. Late submissions will not be accepted.

Rule 5 Class Participation: Class participation marks will be awarded as follows. If you show up on any class day, you get 4 points. If you contribute anything, you get 6.

If your contribution is deemed substantial, you get 8. A full 10 is for truly noteworthy contribution. In all cases, the instructor will be the sole arbiter of the worth of your contribution. I will toss out your two worst performances and average the rest.

D

ATES

(6:30

PM TO

9:20

PM

)

Session 1 Jan 11 Session 2 Jan 18 Session 3 Jan 25 Session 4 Feb 1 Session 5 Feb 8

Session 6 Feb 15 Mid-term exam READING WEEK Feb 22 NO CLASS  Session 7 Mar 1

Session 8 Mar 8 Session 9 Mar 15 Session 10 Mar 22

Session 11 Mar 29 Case Presentations Session 12 Apr 5 Case Presentations Session 13 Apr 12 Final Exam

L

IST OF

C

ASES

SEALED AIR CORP’S LEVERAGED RECAPITALIZATION

GOODYEAR TIRE

THE ACQUISITION OF MARTELL

BEATRICE:ASTUDY IN THE CREATION AND DESTRUCTION OF VALUE BYG.BAKER,THE JOURNAL OF FINANCE,1992

S

ESSION

1: J

AN

11

Takeover Process

Merger and Tender offer terminology

Types of Mergers from an economic standpoint Mergers in a legal framework

The nature of tender offers Risk arbitrage in M&A activity Read: Ch. 1

The Legal and Regulatory Framework

Securities Regulation

Anti-trust Regulation Read: Ch. 2

S

ESSION

2: J

AN

18

Timing of Merger Activity

Early Horizontal Mergers, 1895-1913 Vertical Mergers, 1925-1929

Conglomerate Mergers, 1960s Efficiency Mergers, 1980s Strategic Mergers, 1995-2000 Globalization Mergers, 2003-2007 Merger Waves

Read: Ch. 7

S

ESSION

3: J

AN

25

Economics of Mergers: Theory and Empirical Evidence

Market Inefficiency, Taxes, Market Power, Stakeholders, Synergy, Signals Hostile Takeovers and the Market for Corporate Control

Economically Inefficient Takeovers

Read: Ch. 6, including Appendices A and B; Ch. 8

S

ESSION

4: F

EB

1

Valuation of Mergers

Free Cash Flow Method

Comparable Companies Approach Comparable Transactions Approach

Market Efficiency and Reliance on Market Values Read: Ch. 9, including Appendix A

S

ESSION

5: F

EB

8

Asset Restructuring

Divestitures Spinoffs

Asset Sales

Equity Carve-outs

Tracking Stock

Read: Ch. 11 and Ch. 12

S

ESSION

6: F

EB

15

Mid-term Exam

R

EADING WEEK

: F

EB

22

S

ESSION

7: M

AR

1

Financial Restructuring

Leverage and Leveraged Recapitalizations Dual Class Recapitalizations

Exchange Offers Read: Ch. 13

S

ESSION

8: M

AR

8

Going Private and Leveraged Buyouts

The characteristics of LBOs

The major stages of LBOs The Role of Junk Bonds Read: Ch. 16, and appendices A & B

S

ESSION

9: M

AR

15

Takeover Defenses

Poison Pills Greenmail

Miscellaneous Financial Defenses Golden Parachutes

Read: Ch. 19

S

ESSION

10: M

AR

22

International M&A and Restructurings

Historical Patterns

Forces Driving International M&A Activity Event Returns in various countries

Read: Ch. 17

S

ESSION

11: M

AR

29

Case Presentations

S

ESSION

12: A

PR

5

Case Presentations

S

ESSION

13: A

PR

12

Final Exam