MINING: One Short Assignment Title

The company provides a range of services including power, gas, water, and renewable energy sectors, as well as engineering, construction, and maintenance services for Greenfield and Brownfield projects across various sectors. Additionally, they offer technology and communication services, including infrastructure development and data center services. In the context of an acquisition, the company would consider measures such as appointing a majority of its nominees to the target's board, reviewing operational efficiencies, and seeking to capitalize on revenue expansion opportunities.

MERGER AND ACQUISION
Table of Contents
SECTION-1...................................................................................................................................................3
QUESTION:1................................................................................................................................................3
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QUESTION:- 2..............................................................................................................................................5
QUESTION:- 3..............................................................................................................................................6
SECTION:- 2.................................................................................................................................................7
QUESTION:1................................................................................................................................................7
QUESTION 2.................................................................................................................................................8
QUESTION: - 3..............................................................................................................................................9
SECTION-C...................................................................................................................................................9
QUESTION:-4...............................................................................................................................................9
QUESTION:-5...............................................................................................................................................9
QUESTION:-6.............................................................................................................................................10
QUESTION:- 7............................................................................................................................................11
References.................................................................................................................................................12
SECTION-1
QUESTION:1
What do you think were the five major reasons Downer EDI wanted to acquire the whole
of the equity SPOTLESS?
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ANS :1
MERGER AND ACQUISION LAWS AND THEIR EFFECT ON BIG FIRMS- On a
general aspect in relation to and for the interest of large corporate law firms, the laws and
policies related to mergers and acquisitions, turn out in several ways the ultimate prize- where it
is capable to attract handsome and generous fees, it owns as well as delivers quite a lot of
prestige, and grants more work to the firm as well.
The demand and craze over the application of the laws of Merger and functioning of the
multibillion- dollar deals and other similar engagements have much a way shrunk the very
names which once appeared on the top list of League Tables Of Merger And Acquision.
The reasons as to why DOWNER wanted to acquire the whole of the equity of spotless can be
widely discussed into the following:-
Featuring on a general platform, GUY ALEXANDER, who is the National Co-Head of
Allen’s' and Merger And Acquisition and equity capital markets practice, said that, public
merger and acquisition is essential and important in order to balance and maintain the
smoothness, lustier and above all, the 'BRAND NAME' of a major and reputed firm.
The complexities which the process of merger and acquisition brings in, because of that an
unique industry has been evolved with the emergence of numerous firms of law, stock brokers,
accountants as well as various business experts who are very much dedicated to the different
practices of the process (Barney, 2014). The main motive of this process is to make the
company’s performance enhancement for its respective shareholders through a process of
synergy which determines that the worth and performance of two companies will be calculated
as better than that of the sum of separate individual parts. It is because of this reason that the
companies are able to generate more revenues. Merger and acquisition, unlike a lot of other
commercial legal work, is conducted anonymously and quite fairly,a high profile is acquired by
merger and acquisition laws. however, the business press have a close watch over deals, with
particular emphasis over the contracted ones.
FIRSTLY, WITH IMPORTANCE IN CORPORATE FEILD:- Merger and Acquisition is
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widely sought after as it is one of the scarce areas in the laws governing the corporate world
which has the potential and ability to draw the attention even at the board level.
Moreover, the work of merger and acquision and even those related to it, are highly prestigious
as well as complex and critical, owing much attention to it. This sector can be formulated as the
engine house which is the key factor behind the task of driving the main or principal body of the
firm.
SECONDLY, THE MAIN ISSUE CAN BE CURBED AS THE FOLLOWING The all cash-
bid value of SPOTLESS GROUP HOLDINGS LIMITED was holding a high numeric figure.
The buyout of the entire property would give Downer, who was predominantly an engineering
contractor, another way out or a different stream of income, to balance his main mining business
which got a hit and suffered a blow by the falling commodity prices. Although Downer posted a
half year rise in profit, and showed a rise in its profits after a diversification and alteration of
strategies, this purchase would surely make both his stand and platform strong. Apart from these,
the low cost as proposed by Downer for the entire property, which was way too less than the
actual acclaimed property, would turn out a beneficial purchase for Downer owing to its large
scale profit.
THIRDLY, AS FROM THE MENTIONED CIRCUMSTANCES, other factors can be also be
listed. By acquiring SPOTLESS, Downer would make a significant investment, whose strategy
would be to expand its capabilities and strengthen its position as a leading provider of services to
the customers of Australia and New Zealand.
FOURTHLY, Spotless was served with a class action lawsuit on the behalf of its shareholders
relating to the changes in its earning structure.
FIFTHLY, The purchase of Spotless would give a better claimed and a stronger acquired
position to Downer which would definitely do good to his commercial profession.
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QUESTION:- 2
WHAT DO YOU THINK WERE THE FIVE MOST IMPORTANT ISSUES THAT
DOWNER EDI WOULD HAVE PERSUED IN ITS DUE DELIGENCE ON SPOTLES
GROUP
ANS:- As a response to Downer's offer, Spotless gave a statement that it would evaluate
Downer's offer, and the shareholders were put to an obligation that they would not take any
action until it was recommended by Spotless. Inspite of a hike in the share value, Spotless
declared to sale maximum of its shares. Several issues were pursued on this basis.
FIRSTLY, It was brought that, there were apparently $35 earnings which were unprofaned
contracts, which would require around eighteen months to be changed into earning contracts.
This was indeed a strong point to support the price as well as the proposal of Downer where lest
opposition was expected from the share holders.
SECONDLY, Spotless had been meanwhile been served with a class action law suit in the
behalf of its share holders. An advantage of this situation was very superbly figured out and
given a well defined structure. PEP listed Spotless less than two years out in the market with an
approval and promises to boost its earnings by stripping cost and reducing it room every
possible aspect of functioning and also by selling underperforming divisions and sections in the
firm.
Downer took a proper advantage of this situation and gave his statement that he would fund the
deal mostly through sale worth of $1billion value to its existing share holders. This was a
situation which was disturbing the firm as the share holders were already deprived of what they
deserved. Downer just took an advantage of the situation in order to curb the shareholders to his
side.
THIRDLY, Downer emerged as the bidder with a takeover bid at the exact same value. That
who followed Downer and supported him has acquired a well acclaimed position after Downer
made a flying hike of the price of the shares of Spotless firms by 45%.
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FOURTHLY, To further fund the offer, Downer EDI went to his shareholders with two for five
share issues giving a 20% discount as compared to its last trading price. This move was
important as it strengthened the grip of Downer and also owned him a trust of the share holders,
which was very important owing to their previous behavior and actions so taken.
FIFTHLY, Downer gave a statement that buying Spotless would help broaden its offering in the
facilities and asset management services sector and would also reduce its expose to the resources
sector, where recovery is scant, patchy and doubtful.
Downer further said that purchase would be earnings per share accretive and while the
combination of the two businesses is expected to deliver a pre- tax cost synergies of
approximately $20 million to $40 million a year, although it is supposed to take some time and
may not be effective immediately.
QUESTION:- 3
EXPLAIN THE SYNERGIES RELATED TO DOWNER EDI AND SPOTLESS GROUP
CASE
ANS:- Co- operation or synergy was provided by many titled institutions and organizations
which stimulated a pace to the entire case and list of occurrence that followed in the entire
procedure.
The shareholders played a very important and vital role in the entire case of Downer and
Spotless Group. They had earlier filed an action case against the Spotles group portraying their
grievances that they were not paid their accurate and exact amount which they were supposed to
be paid accordingly in appropriation to the shares they held.
Getting the shareholders in the grab was the most important requirement in the entire series of
events in order to strengthen the claim as made by Downer in buying the entire property of the
Spotless group.
once their support was achieved, it became way easier for Downer to buy the property of
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Spotless group with a promise to pay their deserved payments and incentives and illuminated
the hope of increasing the profits gained by Spotless group.
The aggressive approach emulates the tactics of Spanish construction companies like Group ACS
and Ferro vial which had sucessfully taken over Dowen's contracting rivalsUGL and Broad
Spectrum. They played an important role by reducing the level of competition for Dowen.
A New York hedge fund registered in the Clamen Islands had emerged as Spotless' second
biggest shareholder following Downer EDI's $1.2 billion takeover bid.
SECTION:- 2
QUESTION:1
OUTLINE DOWNER EDI'S APPROXIMATE FINANCIAL STRUCTURE AFTER
PAYING FOR THE ACQUISITION.
ANS:- Dawnor went into the market building a 9.9 per cent stake. Its offer at $1.5 shared in cash
was a significant premium to the target's share price at $72.5.
News of the planned bid as formulated by Downer initialized a raise in the price of shares of
Spotless group by 49%
To help fund the offer, Downer EDI went to its own shareholders with a two for five share issue
and a 20% discount to its last traded price.
Downer EDI said that the combination of two businesses would push up a profit margin and pre-
cost synergies of approximately$20 million to $40 million a year, although it would take time.
One of the harshest critic CITI told its clients that Spotless' shares owed a high risk as it slashed
to a relatively poor and dangerous position as compared to its previous status.
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There were a series if 'earning misses', detoriating debt optics, its concentration of offshore
ownership and the risk that the recent iteration on strategies, served as serious threat to the
working of the Dawnor EDI.
QUESTION 2
ANS:- Most importantly, settling down the issues with the shareholders was the most important
thing that was required to be sorted out once Downer acquired the shares of Spotless group. This
issue required the first given attention, and it was duly given also.
The share holders were so aggrieved about their owner's failure in paying their due
remunerences, that they even filed a case against the farm. In this type of situation, what of
expected of the owner is that he pays them their dues. Dawnor did exactly this. In order to bring
the share holders in his grip, the gave them their remunerations and brought them easily onto
their support.
QUESTION: - 3
ANS:- The reason behind their this work was to illuminate the position of Spotless group and
high lighten it in the market so that companies who own a worthy and strong position in the
market, buy the shares of the company. This was done and the results were apt. The rate of the
shares increased drastically giving the company a good hold in the market. The risks, and the
conditions flourished, giving Spotless groups a pushing success.
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SECTION-C
QUESTION:-4
ANS:- Spotless group had a bundle of problems and risks to be faced when it came to the
market. To begin with, there were the shareholders who, considering themselves to be deprived
of their due amount as arising from the shares they held, filed legal action against the initial
owners of the farm. That was a crucial problem as it would not only hamper the working of the
farm as a whole, but would also adversely affect its market position and hence lower its
acclaimed position.
Further, the other farms developed an illusion owing to the risks in which the farm was
forecasted to be in and hence created an idea that it would not be able to stay up for long. Facing
all these problems and risks, Spotless group has succeeded in making a hike in the price of their
shares.
QUESTION:-5
ANS:- They put on with their working in various fields and operated amidst the risk and
uncertain circumstances. The rate of the shares was lowered in various cases, hiked in the others.
Downer hit hard by the end of the resources boom, has been repositioning itself from mining
sectors to roads and rail, public transport, utilities, communications and defense. The company's
profits increased to$78.2 million, total revenue increased to 3.6% to $1.6 million.
Apart from these, their arena of work can be brought under the following:-
* served food to 68 million customers
*catered for six million sports fans at stadia and major events
*maintained 75000 homes in public housing estates
*washed 33 million sheets and 18 million industrial garments
*managed 2.2 million room nights and 315000 check-inns in 23 remote mining accommodation
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camps.
*delivered 4.4 million hours of service to a wide range of Australian and New Zealand health
care providers.
*purchased 5031 tones of meat, poultry and seafood.
*managed more than 52 million meter reads.
QUESTION:-6
ANS:- The major sources of synergy can be rated as:-
*TRANSPORT SERVICES:- This comprises of Downer’s road, rail infrastructure, bridge,
airport, and port business and provides a broad range of transport infrastructure services.
RAIL:- It provides rail asset solutions including passenger and freight built, operations and
maintenance, etc.
MINING:- It includes all stages of mining lifecycle including blasting services, explosive
supply, asset management, etc
UTILITY SERVICES:- The company provides complete lifecycle services to its customers
including power, gas, water and renewable service energy sectors, including planning, designing,
constructing, operating, maintaining, managing, and decommissioning power and gas network
assets.
EC & M:- The company provides design, engineering, construction, and maintenance service for
Greenfield and Brownfield projects across a range of sectors and all stages of the project
lifecycle including feasibility studies, engineering designs, civil works, structural, mechanical,
shut downs, strategic managements, etc.
TECHNOLOGY AND COMMUNICATION SERVICES:- The company provides end to end
infrastructure service offering comprising feasibility, design, civil construction, network
construction, commissioning, testing, operations, and maintenance across fiber, copper and radio
networks, as well as data enter services, across fiber, copper and radio networks, as well as data
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enter services, intelligent transport technology systems, etc.
QUESTION:- 7
ANS:- In case the acquisition was les than 90% the company decided to take up certain
measures:-
The intentions in such case would be subjected to:-
* the outcome of the offer and the size of Downer's shareholding services at the time.
*compliance with applicable Corporations Act requirements and the ASX listing rules in
particular with relations related to party transactions and conflicts of interests.
* the legal obligation of the directors to act for proper purposes and in the best interests of
spotless shareholders as a whole.
Where there is an expected rise of at least 50% the company would appoint a majority of its
nominees to the Spotless Board. It would incorporate broad based operational efficiencies and
enhancements that may be identified in the review process. It would further seek to capitalize on
any opportunity on expanding their revenues.
The company would further seek to include general reviews having regard to current or future
earnings, debt levels, bonding requirements.
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