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Assignment On Acquisition Of iProperty Group By REA Group
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Added on 2019-09-30
Assignment On Acquisition Of iProperty Group By REA Group
Added on 2019-09-30
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1Section 1Use only the information given in REA GROUP acquires iPROPERTIES case.1) What do you think were the five major reasons REA Group decided to acquire the wholeof the equity of iProperties?Answer: The Reason behind the acquisition of the whole of the equity of iProperties are as follows:a)As iProperty Group has strong presence in Southeast Asian markets like Hong Kong,Indonesia, Thailand and Malaysia, with leading position in Singapore and Philippines.The goal of REA Group to win the Southeast Asian market will be achieved.b)Track record of strong growth long-term growth in key operating and financial metricc)Highly attractive macroeconomic environment with strong growth prevalent acrossthe regiond)Collective recorded property sales outpacing Australia with average property prices insome regions also ahead and growing strongly, a south east Asian market opportunityderives it after the takeover.e)Real estate advertising shifting online from offline real estate advertising.
2 2) What do you think were the five most important issues that REA Group would havepursued in its due diligence on iProperties? Answer: a)The future outcomes and projections have to be reviewed with proper standards as perthe AUASB and experts could have an better opinion on this;b)The legal compliances should have been reviewed under the due diligence for futurelitigation purpose;c)The Information system is an core heart of this business, so the validity of its updatedsystem should be reviewed as an due diligence prospective;d)Environment Due diligence should have been reviewed, prior to acquisition, as therules of the target company could have been different from the current REA groupsrules.e)Personal Due diligence of the employees could have been reviewed by the experts, sothat the capabilities of the employees to work in the environment of the REA groupsuits to the business and the employees.f)The existing market share as per the previous balance sheet, could have beenreviewed with existing interest in the company performance;Section 21. Outline REA Group’s approximate financial structure after paying for the acquisition.Explain whether you think this position exposes the group to excessive risk. Answer: As per the Deloitte, Independent Expert’s Report, the following things have noted, post-acquisition:
3a)REA holds a potential blocking stake with respect to any future potential offer if theProposed Scheme is not implementedb)IPP is projected to experience significant revenue growth within the emergingmarkets which it operates, in our view, the implied revenue multiple for IPP based onFY2016 forecast revenue of 13.2x is not inconsistent with the average for onlineclassified ads of 11.3x.c)To hold the share price of the company, will be the another challenge, as the faith ofIPP stakeholders and the REA has to be strongly built off and the operational andfinancial strength should be immensely developedd)To retain the market share of IPP in leading position, in compare to their competitorswill be then the next challenge;So, I believe that after paying for the acquisition, the group has an excessive risk regarding toretain the current market share and if they will not holds true then they could have blockedtheir future potential offer.2. Explain what you think would be the most likely ‘quick wins’ REA Group could achieveafter taking control of iProperties. Answer: After the acquisition the following are factors are most likely to achieve:a)Real estate advertising shifting online from offline real estate advertising.b)A huge revenue increasing impact from 50 % to 20% in Malaysia and Hongkong inthe period between F.Y. 2016 to F.Y. 2020 of IPP could provide the same synergyeffect to the REA property;
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