Mergers and Acquisitions examination
word count 3,000 words
Questions
Ganfeng International Trade (Shanghai) Co Ltd of China, a unit of Ganfeng Lithium Co Ltd, raised its
interest to 51% in Sonora Lithium Ltd. Prior to the announcement, Ganfeng had already 22.5% stake in
Sonora Lithium Ltd which is a chemical and fertilizer mineral mine operator, from Bacanora Lithium PLC.
This transaction was a privately negotiated transaction.
As an advisor of Ganfeng International Trade Co Ltd, how would you advise your client with respect to
any cultural issues which might arise during the due diligence and post-merger integration process?
(10 marks)
Question 7
In December 2020, Fujitsu drew up a shortlist of 20 acquisition targets as part of a $5.8bn investment
drive to capitalise on a pandemic-induced increase in demand for its digital services. Takahito Tokita,
chief executive, told a senior journalist that the mergers and acquisitions push would accompany an
acceleration in the disposal of non-core assets to sharpen the Japanese group’s focus on tech and
consulting services.
Fujitsu’s M&A strategy is spearheaded by Nicholas Fraser, an acquisition specialist poached from
McKinsey, the professional services firm, in March He joined as part of Mr Tokita’s diversity push, which
involved hiring from rivals, such as PwC, Microsoft, and SAP.
Mergers and Acquisitions examination
(Source: FT)
a) Explain what the reasons are likely to be for the CEO of Fujitsu to pursue a strategy to dispose
their non-core assets.
b) Discuss who could be involved in dealing with the strategy phase and why?
c) What external factors will they take into consideration to finalize the 20 acquisition targets?
(15 marks)
Question 8
“Cadbury had manoeuvred its potential acquirer into paying 850 pence per share – almost fifty percent
more than Cadbury’s undisturbed share price of £5.68.” From our class discussion, the free cash flow
method is normally used for valuing a firm together with the comparable and multiples methods.
a) What costs should be included in the total value of Cadbury?
(5 marks)
b) What other considerations should you take into account from Cadbury’s perspective when
valuing the deal?
Section C
Question 9
The textbook (Intelligent M&A: Navigating the Mergers and Acquisitions Minefield) discusses four major
groupings of active takeover defenses.
How effective was Stuart Rose’s strategy in defending M&S against Sir Philip Green? Discuss using the
four groupings?
Question 10
In February 2021, M&T Bank agreed to acquire its smaller rival People’s United Financial for $7.6bn, the
latest in a series of regional US banking mergers. The combined company would create a diversified,
community-focused banking franchise with approximately $200 billion in assets and a network of more
than 1,100 branches and over 2,000 ATMs that spans 12 states from Maine to Virginia and the District of
Columbia. The all-stock deal would create a new bank with combined assets worth about $200bn.
People’s United shares rose 9.4 per cent to $17 in premarket trading; M&T shares were flat. Once the
transaction is complete, M&T shareholders would control about 72 per cent of the combined
company. The banks estimated the transaction will create annual cost synergies of about $330m. It is
expected to close in the fourth quarter of 2021.
a) Prior to announcing the deal, as an advisor, briefly explain how you would gather information to
produce your report to management of M&T Bank?
(10 marks)
b) As a leader of an advisory team, what factors would you consider in order to recommend to the
board of M&T Bank the determination of the final synergies of this particular deal prior to
completion? (Note you should take into consideration the current situation relating to the Covid
pandemic)