金融管理基础英文版第16版人大版MGH版简答题附答案BHD16eSMChapter20.docx

1、金融管理基础英文版第16版人大版MGH版简答题附答案BHD16eSMChapter20Chapter 20External Growth through MergersDiscussion Questions20-1.Name three industries in which mergers have been prominent.Computers, telecommunications, public utilities, pharmaceuticals, and energy.20-2.What is the difference between a merger and a cons

2、olidation?In a merger, two or more companies are combined, but only the identity of the acquiring firm is maintained. In a consolidation, an entirely new entity is formed from the combined companies.20-3.Why might the portfolio effect of a merger provide a higher valuation for the participating firm

3、s?If two firms benefit from opposite phases of the business cycle, their variability in performance may be reduced. Risk-averse investors may then discount the future performance of the merged firms at a lower rate and thus assign a higher valuation than was assigned to the separate firms.20-4.What

4、is the difference between horizontal integration and vertical integration? How does antitrust policy affect the nature of mergers?Horizontal integration is the acquisition of competitors, and vertical integration is the acquisition of companies that produce goods and services used by the company.Ant

5、itrust policy generally precludes the elimination of competition. For this reason, mergers are often with companies in allied but not directly related fields.20-5.What is synergy? What might cause this result? Is there a tendency for management to over- or underestimate the potential synergistic ben

6、efits of a merger?Synergy is said to occur when the whole is greater than the sum of the parts. This “2 + 2 = 5” effect may be the result of eliminating overlapping functions in production and marketing as well as meshing together various engineering capabilities. In terms of planning related to mer

7、gers, there is often a tendency to overestimate the possible synergistic benefits that might accrue.20-6.If a firm wishes to achieve immediate appreciation in earnings per share as a result of a merger, how can this be best accomplished in terms of exchange variables? What is a possible drawback to

8、this approach in terms of long-range considerations?The firm can achieve this by acquiring a company at a lower P/E ratio than its own. The firm with a lower P/E ratio may also have a lower growth rate. It is possible that the combined growth rate for the surviving firm may be reduced and long-term

9、earnings growth diminished.20-7.It is possible for the postmerger P/E ratio to move in a direction opposite to that of the immediate postmerger earnings per share. Explain why this could happen.If earnings per share show an immediate appreciation, the acquiring firm may be buying a slower growth fir

10、m as reflected in relative P/E ratios. This immediate appreciation in earnings per share could be associated with a lower P/E ratio. The opposite effect could take place when there is an immediate dilution to earning per share. Obviously, a number of other factors will also come into play.20-8.How i

11、s goodwill now treated in a merger?It is placed on the books of the acquiring company, but it is not amortized. It is only written down if it is impaired.20-9.Suggest some ways in which firms have tried to avoid being part of a target takeover.An unfriendly takeover may be avoided by:a. Turning to a

12、 second possible acquiring companya “White Knight.”b. Moving corporate offices to states with tough pre-notification and protection provisions.c. Buying back outstanding corporate stock.d. Encouraging employees to buy stock.e. Staggering the election of directors.f. Increasing dividends to keep stoc

13、kholders happy.g. Buying up other companies to increase size and reduce vulnerability.h. Reducing the cash position to avoid a leveraged takeover.20-10.What is a typical merger premium paid in a merger or acquisition? What effect does this premium have on the market value of the merger candidate and

14、 when is most of this movement likely to take place?Typically, a merger premium of 4060 percent is paid over the premerger price of the acquired company. The effect of the premium is to increase the price of the merger candidate, and most of this movement is likely to take place before public announ

15、cement.20-11.Why do management and stockholders often have divergent viewpoints about the desirability of a takeover?While management may wish to maintain their autonomy and perhaps keep their jobs, stockholders may wish to get the highest price possible for their holdings.20-12.What is the purpose(

16、s) of the two-step buyout from the viewpoint of the acquiring company?The two-step buy-out provides a strong inducement to target stockholders to quickly react to the acquiring companys initial offer. Also, it often allows the acquiring company to pay a lower total price than if a single offer is made.Chapter 20Problems1. Tax loss