Materi Asistensi Merjer dan Akuisisi Credit to Ross

1. Pertemuan 9
Rabu, 5 Desember 2012

2. MERGER AND ACQUISITION

3. Three Basic Legal Procedures
• Merger or consolidation
– Merger  Acquiring firms retains its name and its
identity, and it acquires all the asset and liabilities
of the acquired firm.
– Consolidation  entirely new firm is created
• Acquisition of stock
– Purchase the firm’s voting stock with an exchange
of cash, shares of stock or other securities
• Acquisition of assets
– Buying most or all of acquired company’s assets

4. Gains from Acquisition
• Synergy
– VAB > VA + VB  ΔV = VAB – (VA + VB )
• Revenue enhancement
• Cost reductions
• Lower taxes
• Reducing in capital needs

5. Financial Side Effects of Acquisition
• Assume no synergy

6. Cost of Acquisition
• ΔV = VAB – (VA + VB )
• Total value of firm B to firm A, V*B , is
– V*B = ΔV + VB
• NPV of the merger is therefore
– NPV = V*B – Cost to firm A of the acquisition
• Merger premium
– Kelebihan pembayaran diatas market value

7. Illustration
• Suppose firm A estimate that firm B will give
incremental value to it by 100.
• Firm B will agree if the price offered is 150,
payable in cash or stock

8. Illustration
• NPV = V*B – Cost to firm A of the acquisition
• NPV = (ΔV + VB)– Cost to firm A of the acquisition
• (ΔV + VB) = 100 + 100 = 200
• Case 1: Cash Acquisition
• NPV = (ΔV + VB)– Cost to firm A of the acquisition
• NPV = 200 – 150 = 50 (profitable)
• AB still have 25 shares outstanding, value of firm A after
the merger
– VAB = VA + (V*B - cost)
– VAB = 500 +200 – 150 = $550
– Price per share after merger = $550/25 = $22

9. Illustration
• Case 2 Stock Acquisition  Firm B come in as
new shareholders in the merged firm
• VAB = VA + VB + ΔV = $500 + $100 + $100 = $700
• Firm A should issue additional shares:
– $150/20 = 7.5 additional shares
– After merge, outstanding shares 25 + 7.5 = 32.5 
price per share = $700/32.5 = $21.54
– Firm B received 7,5 shares equivalent with
• 7,5 x $21.54 = $161.55
• NPV = V*B – Cost to firm A of the acquisition =
– $200 - $161.55 = $38.45

10. Cash or Stock?
• If acquisition results a gain (positive NPV)
– Cash is better than stock
• If acquisition results a loss (negative NPV)
– Stock is better than cash because the loss is
shared between the two firms
• Control  acquisition by paying cash does not
affect the control of the acquiring firm