Analysis of Incentives in Mirvac's Acquisition of James Fielding Group

This report examines the 2004 acquisition of James Fielding Group (JFG) by Mirvac Group, analyzing the economic rationales and personal incentives of the boards of directors of both companies. The acquisition, valued at $478.2 million, aimed to combine culturally aligned property investment, development, and management teams. The report highlights the benefits for Mirvac, including access to JFG's customer base, a larger balance sheet, and enhanced funding options. For JFG, the acquisition provided new opportunities for its directors and increased value for security holders. The analysis considers the impact on market capitalization, expansion of operations, and the creation of new teams to manage the transition to IFRS. The report references sources like The Sydney Morning Herald and ASX documents to support its findings, concluding that the acquisition was mutually beneficial for both Mirvac and JFG, leading to significant growth and asset expansion.

Running Head: ACCOUNTING FOR BUSINESS COMBINATIONS
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ACCOUNTING FOR BUSINESS COMBINATIONS

Running Head: ACCOUNTING FOR BUSINESS COMBINATIONS
What are the personal incentives of the board of directors of the (i) bidder and (ii) target if
the acquisition is successful?
Mirvac announced that James Fielding Group at the bid values at $478.2 million and the shares
at reached to $3.13. The acquisition helped in bringing two culturally aligned property
investment, property development, management of the teams and the hotel management teams.
These operations complement each other and combined it gets delivered to more diversified
property investment.
The personal incentives that board of Directors of the bidder, and in the process of the
acquisition the James Fielding's managing director Greg Paramor has now formally been
appointed as the new managing director of Mirvac. This deal turns out to be the novel decision
for Mr Paramor, previously. Overall if it can be seen the boards of Mirvac and JFG, both of them
will benefit both the security holders. Also, it is imperative from the overall performance that
Mirvac continues to excel, in the enhancement of the investment decisions. These two groups are
better for each other (The Sydney Morning Herald, 2005).
Bidder: The personal incentives have a kind of the magnetic pull as it will become fourth largest
listed property in the Australian Market with the capitalization of $3.8 billion. The bidder will
get the customer base of James Fielding Group. Mr Hamilton tends to be the same executive
director of Mirvac’s development business. The more people will be appointed once the strategy
falls back into place. The whole hotel fund will also be accessible by Mirvac Group and property
fund worth $50 million in funds. The process of acquisition will lead to the significantly higher
balance sheet, more feasible funding options and a wider platform to operate which will

Running Head: ACCOUNTING FOR BUSINESS COMBINATIONS
maximize the overall ability to capitalize the existing projects (The Sydney Morning Herald,
2005).
Target: The personal incentive in case of JFG fielding is $513814 and this will surely lead to
new position for the directors of the JFG. These two companies are complimentary to each other
and do not overlap materially. As such no material cost synergies are anticipated and therefore
this leads to the evolution of new company. Mirvac and JFG have created the new teams to
manage the overall transition to the Australian equivalents of IFRS and the acquisition is
necessary to gather all the required financial information. The acquisition will also enhance
Mirvac by further strengthening the overall platform for the potential growth and the
substantiality. In terms of the distribution the JFG security holders are eligible for 12.56 cents
per security for the six months which are for the period ending 30 June 2005 and the increase of
2.5 per cent increase over the distribution of second half (Jfg, 2005).
The forces joined by Mirvac and James provide the string platform and the overall growth of the
total assets also comes to at $4.9 billion. Further, an investment development pipeline will create
the new business opportunities with greater flexibility in terms of holding, managing and the
funding the property. Also upon the completion of the transaction, the group’s investment
decision will be headed By Mr. Nicholas Colllishaw is currently the executive director and the
owner of the property. From the overall analysis it can be considered that the acquisition was in
the favor of Mirvac and JFG and this relates to one of the greatest acquisition in the history of
Australia (Good returns, 2004).

Running Head: ACCOUNTING FOR BUSINESS COMBINATIONS
References
Good returns, (2004) Mirvac to take over James Fielding, with Paramor at helm [Online]
Available from https://www.goodreturns.co.nz/article/976509771/mirvac-to-take-over-james-
fielding-with-paramor-at-helm.html [Accessed on 10th September 2019]
Jfg, (2005) Mirvac and James Fielding join forces [Online] Available from
https://www.asx.com.au/asxpdf/20041012/pdf/3n69tfpgwkt9d.pdf [Accessed on 10th September
2019]
The Sydney Morning Herald, (2005) James Fielding directors move to Mirvac [Online]
Available from https://www.smh.com.au/business/james-fielding-directors-move-to-mirvac-
20050108-gdkg7d.html [Accessed on 10th September 2019]