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Mergers and Acquisitions Name of the University Author's Name

   

Added on  2021-04-21

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Running head: MERGERS AND ACQUISITIONSMergers and AcquisitionsName of the StudentName of the UniversityAuthor’s Note
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1MERGERS AND ACQUISITIONSTable of ContentsIntroduction......................................................................................................................................2Requirement: Part A........................................................................................................................2Answer to Question 1..................................................................................................................2Answer to Question 2..................................................................................................................3Answer to Question 3..................................................................................................................3Answer to Question 4..................................................................................................................4Answer to Question 5..................................................................................................................5Answer to Question 6..................................................................................................................5Answer to Question 7..................................................................................................................6Answer to Question 8..................................................................................................................8Conclusion.......................................................................................................................................8References........................................................................................................................................9
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2MERGERS AND ACQUISITIONSIntroductionMergers and Acquisitions are considered as two of the major aspects in the worldbusiness over the years. In general, mergers and acquisitions refer to the process of consolidationof the companies. It needs to be mentioned that there are various forms of mergers andacquisitions; they are acquisitions, mergers, tender offers, consolidations and others (Cartwrightand Cooper 2012). The main aim of the report is to analyze and evaluate different dimensions ofmergers and acquisitions and the report is based on the provided case study of EarlingConstruction Plc and Manco Construction Plc. Requirement: Part AAnswer to Question 1Manco Plc should take the following steps to defend the takeover bid by Earling PLC:Manco Plc should adopt the strategy of Poison Pill Defense to defend the takeover fromEarling PLC. Under thus strategy, the target company that is Manco Plc is required todilute their shares in such a manner that Earling PLC needs to incur large amount ofexpenses for obtaining the controlling percentage of share (Rhee and Fiss 2014). As perthe provided case study, the economic crisis badly hit Earling PLC economically. In thissituation, the company would think twice before incurring large expenditure for theacquisition of Manco Plc.Apart from the above, Manco Plc can also adopt the strategy of Stock Repurchase todefend takeover. Under this process, Manco Plc needs to repurchase their shares fromtheir shareholders to prevent this takeover from Earling PLC. Manco Plc can adopt thesetwo techniques (Auerbach 2013).In general, Manco Plc can take the following techniques to defend any potential takeover:Manco Plc can adopt the strategy of Staggered Board under which only one third of thedirectors are reelected annually.Manco Plc can adopt the strategy of Shark Repellants in which the acquirer companiesneed a supermajority vote requirement for the takeover of the company.
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3MERGERS AND ACQUISITIONSIn addition, other techniques are Golden Parachute, Greenmail, Standstill Agreementand others (Ferris, Jayaraman and Sabherwal 2013). Answer to Question 2According to the provided case study, it is advised that Earling PLC is the ‘predator’ andManco Plc is the ‘target’. The justification is provided below with definition.Predator: In the process of mergers and acquisitions, a company with sufficient financial powercan easily bear the associate risks of the process of takeover. For this reason, financial strongercompanies are regarded as Predators. In this case, Earlings PLC has financial superiority thanManco Plc and thus, needs to be considered as predator (Jordan 2016).Target: In the merger and acquisition process, companies with less financial capability areconsidered as Target; as they can be easily takeover by more financially stable companies. Asper the provided case study, Manco Plc needs to be considered as target due to their poorfinancial condition (Shi, Sun and Prescott 2012). Answer to Question 3As per the provided case study, Earlings PLC offered Manco Plc €4.75 per share whilethe actual value was €10.50 per share. It can be seen that Earling PLC is offering very lessamount of the actual share value. However, in case of Management Buyout (MBO) strategy,Manco Plc can get higher price of share value than the offering of Earling PLC. For this reason,Manco Plc might consider a potential MBO (Mao and Renneboog 2015).The advantages and disadvantages of MBO are discussed below:AdvantagesThe main advantage of MBO is that it increase the motivation of the employees as theoverall success of the business create positive impact on them.The new owners of the business can make effective business decisions based on theirexperience as they have been the employees of the company for years.In case the business was a part of large group, MBO increases the efficiency of thebusiness as the management does not have to discuss the decision with the headmanagement of the group (Berry and Green 2016).
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