Takeovers and Mergers Course Booklet 2011 2012

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TAKEOVERS AND MERGERSCourse Booklet

Semester 2b2011/2012

MBA

Option Course


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Putting you at the heart of business Takeovers and Mergers2

Contents Page Number

Course Details....................................................................................................3Course Description and Objectives .................................................................... 3Learning Outcomes ............................................................................................3Planned Student Learning Experiences .............................................................4

Teaching Approach............................................................................................. 4Assessment........................................................................................................4Feedback............................................................................................................5Guidelines for Formatting and Handing in Assessed Work: ............................... 5Failure to Attempt or Complete Assessed Coursework or an Examination........ 5Exam Arrangements for Disabled Students........................................................ 6Plagiarism Statement.......................................................................................... 6Appeals...............................................................................................................6Consultation........................................................................................................6Course Monitoring Surveys ................................................................................7Required Text(s)................................................................................................. 7Course Website..................................................................................................7Advised Preparatory Work.................................................................................. 7Course Topics.....................................................................................................7Study Programme............................................................................................... 9Lecture Outlines and Readings ..........................................................................9Exam Papers ......................................................................................................9Appendix 1: Further Reading.............................................................................. 9


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Course Details

Course Code: BUST11045Title: Takeovers and MergersCollege: Humanities and Social Science

School: The University of Edinburgh Business SchoolCourse Organiser: Paul AndreContact Hours: 20Semester:Lectures:

2bMonday 30th April Thursday 3rd May

This is a 10-credit course. As per the Scottish Credit Qualifications Framework (SCQF), this meansthat it should entail 100 hours of student effort. For example:

Contact hours 10 x 2 hour lectures 20

Preparatory reading 2.5 hours per lecture hour in

advance of lecture

50

Tutorial work Not applicable Not applicableAssignments 30

Total 100 student effort hours

Course Description and Objectives

Objectives/Aims

The course evolves around the following themes: Business combinations and related corporategovernance issues. The course will give students a good appreciation of the theoretical, practical and

institutional aspects of Takeovers & Mergers. The course will further examine valuation andperformance measurement issues related to Takeovers & Mergers. The emphasis is on cases studiesthat illustrate real life mergers. The Bruner textbook (2004) offers background information and astructure. Finally, the course should give students the theoretical background to better understandand criticize the important economic activity that is mergers and acquisitions.

Learning Outcomes

Knowledge and Understanding:

After completing this course, students should be able to:

have an appreciation of some of the main strands of theory and the latest trends in research onwhich takeovers and mergers depend;

understand some of the key strategic and operational financial decisions the corporation has tomake and the relevant issues that need to be considered in the context of takeovers and mergers;

understand how firms make takeovers and mergers and how they structure and finance them; understand how takeovers and mergers are reflected in financial reports and how investors react

to them; understand some of the key success factors of takeovers and mergers.

Course members will be expected to apply what they are covering on the course to current events inthe financial news.


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Cognitive Skills:After completing this course, students should be able to: demonstrate how takeovers and mergers can contribute to firm strategic success and value

enhancement; evaluate the relevance and practical application of established paradigms and theories;

critically appraise the importance of good takeovers and mergers planning; take a holistic approach to solving decision problems and assessing potential outcomes using a

financial framework; explain choices in financial assessment methods and their rationale for adoption in a particular

decision issue.

Subject Specific Skills :After completing this course, students should be able to: utilise information and data obtained from a variety of sources, including the library, the internet,

databases and management information systems for evaluating a financial problem apply financial methodologies to strategic and operational level decision problems in the specific

context of takeovers and mergers analyse material presented in a variety of ways and structure it into a coherent argument for

evidence-based decision making critically analyse problems in business finance and defend the conclusions reached

Planned Student Learning ExperiencesThe course is structured around case studies and their discussion (details of which are given later inthis booklet) supported by additional selected readings from the set texts. Additional referencematerial will be provided during the lectures. The course features a combination of taught material,practical exercises, case studies, self-study from the set texts and supplementary readings andclassroom discussion. Students are encouraged to contribute their own experiences to thediscussions. The approach taken is interactive and participative, involves group work and exploration

of live business issues.

Teaching ApproachLearning will primarily be through case studies and class discussions complemented with lectures.Issues around Takeovers & Mergers are complex and can take time to absorb and students shouldexpect to have to invest time prior to lectures (including having read and prepared the case beforeclass) in order to fully understand and participate in class discussions.

Cases used are (subject to change):Schneider-Square D Merger (CICA Case)

Upjohn-Pharmacia Merger (Harvard Business Case 9-197-034)J DS Uniphase Merger (Ivey School of Business Case 9B01B031)Nantucket Nectars (Harvard Business Case 9-898-171)

AssessmentTeam daily case hand-ins: 80%Class participation: 20%

Teams will change for every case. Daily submission directly to course organiser, Monday toThursday.


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FeedbackAssessment feedback will be provided on a feedback form in the appropriate format. Assessmentmarks and feedback will be made available by (course organiser to provide a date should be withinone month of submission or before students sit their degree examination)

Feedback Format1.Coursework documentation comments written on the coursework documentation for you to

consult2. Coursework feedback form incorporating some overall comments on your work

Guidelines for Formatting and Handing in Assessed Work:All completed assignments should be stapled and clearly labelled with the students examinationnumber for individual assignments and each students matriculation numbers for group assignments.Names should NOT be written on the assignments themselves, so that they can be markedanonymously. Students are asked to attach an assignment submission sheet as a front cover. Thestudents name should be written on this sheet along with the examination number if an individualassignment or each students matriculation number for a group assignment. A template for this canbe found at www.business-school.ed.ac.uk/mybiz.

When the assignments are received the assignment submission sheet will be removed before theassignments are sent to the relevant lecturer(s) for marking. Students must also submit eachassignment electronically by TURNITIN which can be located on WebCT. For the group assignment,once the groups have been composed, a group member will be assigned as responsible for this.Please see instructions via the student portal. This is to enable checks to be carried out for plagiarismon a random basis, or if suspicions are raised.

The University has a standardised penalty for late submission of coursework. The School will apply auniform penalty of a reduction of 5 marks for each 24 hours beyond the coursework deadline

(Saturday, Sunday and University Public Holiday not included) unless late submission has beenrequested in advance of the submission date and approved in writing by the course organiser. Forexample:- an essay with a mark of 65% which is less than 24 hours late will be given a final mark of 60%- an essay with a mark of 65% which is between 24-48 hours late will be given a final mark of 55%- an essay with a mark of 65% which is 48-72 hours late will be given a final mark of 50% and so on...The penalty will not be applied if good reasons can be given, such as documented illness.

COURSEWORK DEADLINES ARE ABSOLUTE AND MUST BE STRICTLY ADHERED TOOTHERWISE THE STANDARDISED PENALTY WILL BE APPLIED WITHOUT EXCEPTION.

Extensions to coursework deadlines will normally only be granted in cases of illness or other

extenuating circumstances. An extension can only be granted by the course organiser; requests foran extension to the deadline must be agreed with the course organiser prior to the courseworkdeadline. If this proves impossible, students must attach a letter of explanation to the coursework,signed and dated. If you are given an extension, you must ensure that the Postgraduate Office (RoomGF.15, 29 Buccleuch Place, Edinburgh, EH8 9J S) has written proof of this, e.g. in the form of anemail from the course organiser.

Failure to At tempt or Complete Assessed Coursework or an ExaminationWhere a student fails to attempt or fails to complete assessed coursework or an examination, thecourse organiser will seek to establish from the student whether the failure is legitimate (i.e.supported by appropriate documentary evidence) or not. A failure to attempt assessed coursework oran examination without good reason will result in a zero mark being awarded for that element ofassessment. In the case of a legitimate failure to attempt or complete assessed coursework, thecourse organiser may decide to offer an extended submission deadline (without marks deduction for


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late submission). Where a student is able to produce evidence of legitimate reasons for failure toattempt or complete an examination, and where it has not been possible to offer an extendedsubmission deadline for a legitimate failure to attempt or complete assessed coursework, the courseorganiser will refer the case to the Special Circumstances Committee.

Groupwork IssuesWhere group work is involved, should there be any problems with the group dynamic, these shouldbe raised by two concurring members of the team with the course organiser before the ReadingWeek.

Exam Arrangements for Disabled StudentsIf required, specific reasonable adjustments will be made to enable disabled students to sitexaminations, including any written, practice or oral examination, continuously assessed courseworkor dissertation which counts towards the final assessment. For more information about the supportdisabled students can receive and the approval process for making reasonable adjustments visithttp://www.ed.ac.uk/schools-departments/student-disability-service . Arrangements for degreeexaminations must be approved in advance by the Registry (650 2214), and the Student Disability

Service (650 6828) for dyslexic students, and reported to the examiners. Academic Registry requiresnotification of specific examination arrangements for dyslexic students well in advance of examinationweeks and specific deadlines apply (see http://www.ed.ac.uk/schools-departments/registry/other-info/dyslexia). For all other disabled students Academic Registry must see and accept a medicalcertificate or similar documentation relating to the student or be satisfied that an acceptable certificatewill be produced. Such students should discuss their requirements with their Programme Directorand/or the Student Disability Service at the earliest opportunity.

Plagiarism StatementPlagiarism and cheating are offences against the University discipline. The full text of the Universitysregulation on plagiarism and cheating can be found on the Universitys website:

http://www.docs.sasg.ed.ac.uk/AcademicServices/Discipline/StudentGuidanceUGPGT.pdf

AppealsThe process for students appealing against the assessment of grades is described in the Code ofPractice for Taught Postgraduate Programmes.

ConsultationStudents are encouraged to raise any concerns of a subject specific nature with the relevant courseorganiser. All but the simplest issues take time to resolve, and so please raise the issues as soon asyou are aware of them.

In the event that your course organiser cannot assist you, please contact your Programme Director.


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Course Monitoring SurveysAs the PGT programmes are constantly being streamlined to remain progressive and contemporary,it is essential that you provide feedback on the courses you undertake so that the academic andadministrative staff can be aware of your needs and the needs of your peers; the only way we can dothis is if you let us know our strengths and what can be improved to make your learning experience

with us as relevant and fulfilling as possible.

At the conclusion of every semester you will be asked to complete anonymous online coursemonitoring surveys. You will be notified when the surveys relevant to your programme become live.The results of these surveys will then be collated and distributed to the course lecturer(s) who will inturn provide feedback on the course.

All information provided by students and course lecturer(s) will be taken into consideration bydecision makers within the Business School and may alter the way that future courses areadministered. We are providing you with an outlet to voice your opinions and it is very important forthe current state and the future of the Business School and its students that you do so.

Required Text(s)Bruner, Robert,Applied mergers & acquisitions, Wiley finance, 2004

Course WebsiteLecture materials will be made available online via WebCT, which is accessible from the quick linksarea on MyBiz http://www.business-school.ed.ac.uk/mybiz/home

On the course website you will be able to find a copy of this booklet, course handouts,announcements and other facilities. It is important that you regularly check the WebCT system inorder to keep up to date with the course. You should be automatically registered for all your courses;if you are not please consult the Programme Secretary (email [email protected])

to ensure that your records are in order. A user guide and full details of how to logon and use thesystem are available on the website. N.B. It is vitally important that you check your WebCT mailboxregularly OR set it up so that it forwards messages automatically to your regular e-mail account.

Advised Preparatory WorkStudents should have some basic accounting and finance training including some knowledge ofbasic valuation models.

Course Topics

1. Institutional and Theoretical Framework

1.1 The takeover process, motives for takeovers and merger waves1.2 Structuring the deal: Regulatory, Legal, Accounting and Tax issues2. Valuation Issues3. Mergers and Acquisitions - Empirical Findings

3.1 Long term operational performance following Takeovers & Mergers3.2 Short term financial performance following Takeovers & Mergers: Event studies3.3 Long term financial performance following Takeovers & Mergers

4. Corporate governance mechanisms and merger success4.1 Ownership and control issues4.2 Performance and other issues4.3 Incentives and compensation


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Paul Andr Ph.D., CAProfessor of Accounting and Management ControlCo-Chair ESSEC KPMG Financial Reporting ChairESSEC Business School ParisEmail: [email protected]

Paul Andr, Ph.D, CA, is Professor of Accounting and Management Control at ESSEC BusinessSchool Paris and has had previous positions at University of Edinburgh, HEC Montral, UQAM andUniversity of Ottawa. Paul is also Co-Director of the ESSEC KPMG Financial Reporting Centre. Paulhas published many papers on mergers and acquisitions, corporate governance, ownership structure,and financial statement analysis. He is associate editor at the Journal of Business Finance &Accounting and is/has been on the editorial boards of Contemporary Accounting Research,Accounting in Europe, Comptabilit Contrle Audit and Finance Contrle Stratgie, among others.Graduated from the University of Waterloo (Canada) in 1996 with a Ph.D. in financial accounting andfinance, Paul has been active in numerous research projects and in the development of financialstatement analysis and mergers and acquisitions seminars for MSc, MBA and CFA candidates and oftailored training seminars in finance and accounting for various organisations. Chartered Accountant

(CA) since 1986, Paul worked for one of the big international accounting firms, Ernst & Young, inOttawa and Melbourne (Australia). Dr. Andr has been a visiting professor at the Universit de Paris-Dauphine, Universit de Paris-Crteil, Concordia University and ISCAE. He is currently HonoraryVisiting Professor at Cass Business School, London and President of the Association AcadmiqueInternationale de Gouvernance.He has participated in various executive training programs atBombardier, Pratt-Whitney, KPMG, NHS, SWIP, Danone and SNCF, to name a few.

M&A and other relevant publications:Yen, T. and P. Andr, 2010, The Effects of Ownership Structure on Operating Performance ofAcquiring Firms in Emerging Markets, Journal of Business and Policy Research, Vol. 5, No. 2, p. 217-236

Andr, P., 2009, Discussion of Firm Performance and Managerial Succession in Family ManagedFirms, Journal of Business Finance & Accounting, 36(3) & (4), April/May 485-495

Khalil, S., M. Magnan and P. Andr, 2008, The adoption of deferred share unit plans for outsidedirectors and shareholder wealth, Corporate Governance:AnInternational Review, 16(3) May, 210-224.

Andr, P., M. Magnan and S. St-Onge, 2008 Analysis of a merger from a governance perspective:the case of Abitibi-Consolidated and Donohue, Canadian Journal of Administrative Sciences, 25(2),153-169

Xu, B., M. Magnan and P. Andr, 2007, The stock market valuation of R&D information in

biotech firms, Contemporary Accounting Review, 24(4), Winter, 1291-1318.

Yen, T., P. Andre, 2007, Concentrated Ownership and Long Term Operating Performance ofAcquiring Firms: The Case of English Origin Countries, Journal of Economics and Business,vol. 59(5) September-October, p. 380-405

Andr, P. S. Khalil, and M. Magnan., 2007, Termination fees in mergers and acquisitions: Protectinginvestors or managers?,Journal of Business Finance & Accounting, 34(3&4), April/May, p. 541-566

Ben-Amar, W. and P. Andre, 2006, Separation of Ownership from Control and Acquiring FirmPerformance: The Case of Family Ownership in Canada, Journal of Business Finance andAccounting vol. 33 (3&4), April/May, p.517-543

Andr, P., M. Kooli and J .F. LHer, 2004, The long-run performance of mergers and acquisitions:Evidence from the Canadian stock market, Financial Management 33(4), winter, p. 27-43.


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Study Programme

Monday 30 AprilThemes: Strategy and ValuationAM Introduction + Break-out groups prepare Schneider-Square D case

PM Class Discussion complemented with lecture

Suggested pre-readings (beyond the case itself)Bruner chapters 1, 5, 9 & 12

Tuesday 1st MayThemes: Negotiating and deal structureAM Break-out groups prepare Nantucket casePM Class Discussion complemented with lecture

Suggested pre-readings (beyond the case itself)Bruner chapters 18, 19, 20, 25 & 30

Wednesday 2nd MayTheme: Accounting and Taxes for M&AGovernance, Hostile takeovers and takeover attack and defenseAM Break-out groups prepare J DS case and class discussionPM Lecture & discussion on above topicsSuggested pre-readings (beyond the case itself)Bruner chapters 16

Thursday 3rd MayThemes: M&A successAM Break-out groups prepare Upjohn-Pharmacia case and discussion

PM Lecture and discussion on M&A success

Suggested pre-readings (beyond the case itself)Bruner chapters 3, 11, 36 & 38

Lecture Outlines and ReadingsAs above

Exam PapersWhere applicable all available exam papers can be found on the University of Edinburgh website at:http://www.exampapers.lib.ed.ac.uk/

Appendix 1: Further ReadingSudarsanam, Sudi, Creating value from mergers and acquisition: The challenges, FT Prentice Hall(Pearson Education), 2nd edition, 2010.

Weston J . Fred, Mark L. Mitchell and J . Harold Mulherin, Takeovers, Restructurings and CorporateGovernance, Pearson/Prentice Hall, 4th international edition, 2004

Gaughan, Patrick A., Mergers, Acquisitions, and corporate restructurings, 5th edition, J ohn Wiley &Sons, 2011

Documents

Takeovers and Mergers Course Booklet 2011 2012