Boston University
Metropolitan College
FI 733: Mergers & Acquisitions
Professor: John D. Sullivan, Ph.D. Boston University, 808
Commonwealth Ave, Boston, MA 02215, Office Phone (617) 353
- 3018 Email: jsulliva@bu.edu
Campus & Time: Main Campus - Thursday
6:00 PM to 9:00 PM
Office Hours: By appointment
Monday through Thursday. You may call me either at home or at the
office. If I'm not home or in a meeting, please leave a message
on my answering machine or voice mail and I will get back to you
as soon as possible.
Schedule Issues: From time to time, I am called away
on business and this may interfere with class. I will let you know
as soon as possible if I will not be able to conduct class. In the
event that we cannot hold class for one reason or another,
we may need to reschedule or move an assigned case to the next week.
Course Content and Objectives
This course examines the process by
which takeovers and other corporate control transactions take place.
Of particular interest will be the defensive measures by management
against hostile bids, buyout transactions, the relation of
takeovers to capital structure changes, and the insider trading
in takeover contests.
Case Study Analysis
The case studies for this class were
chosen to represent different aspects of financial strategy. Case
study enables us to venture into many business situations,
analyze the important issues, and after detailed review, make recommendations.
Harvard Cases & Notes
Available through the Bookstore
Takeovers: Folklore and Science 84609
Note: Valuing a Business Acquisition Opportunity 9-289-039
Case: The Takeover of the Norton Company 9-291-002
Case: Philip Morris Companies and Kraft, Inc. 9-289-045
Choosing Compatible Acquisitions 81109
Diversification via Acquisition: Creating Value 78408
Case: Time's Entry into the Entertainment Industry 9-293-117
Case: Kraft General Foods: The Merger (A) 9-391-139
Strategic Analysis for More Profitable Acquisitions 79409
Acquisitions: The Process Can Be a Problem 86203
Case: Ross Perot and General Motors 9-491-027
Case: Partners Financial Health Care 9-696-062
Case: Allen Lane 9-384-077
Mebel, Doran & Company 9-287-001
Quorum Health Group, Inc. 9-295-156
Mt. Auburn Hospital 9-397-083
Making the Deal Real: How GE Capital Integrates Acquisitions
98101
The Acquisition of Consolidated Rail Corporation 9-298-006
Mercedes-Benz in Alabama 9-199-028
Can this Merger be Saved? 99103
VacationSpot.com & Rent-A-Holiday 9-800-334
Lessons from Master Acquirers: A CEO Roundtable R00312
May also be obtained at: www.hbsp.harvard.edu
Other Case Studies
Available through the Instructor or the European Case Clearing
House
National Medical Care 200-014-1
Aetna 2000 200-022-1
Everest Healthcare 201-032-1
Trans World Airlines 201-037-1
Teradyne 201-052-1
Willamette 102-016-1
MedImmune 102-009-1
The Proposed Merger of HP & Compaq 102-010-1
May also be obtained at: www.ecch.cranfield.ac.uk
Other Suggested Reading:
The Wall Street Journal
Investor's Business Daily
Fortune Magazine
Business Week
Suggested Calculator
Hewlett Packard HP 12-C
Grading:
First Case Write Up 15%
Second Case Write Up 20%
Third Case Write Up 25%
Group Case Write Up & Presentation 25%
Class Participation 15%
Case Analysis and Preparation
You will need to prepare 3 (1 of which
must be from the ECCH case packet) case studies of your choosing.
Each case study will be due at the beginning of the class
in which that case study is being discussed. For a successful case
write up, you will need the following:
1. Case papers should address the key
issues that pertain to the financial strategy and then make clear
recommendations with as much support as possible.
2. Papers should be no more than three
double spaced pages (not including exhibits) and include a cover
page with your name, the date, the course number, and the
title of the assignment (case name).
3. Papers should be organized into
specific sections. For example, Background, Key Issues, Risk, Recommendations,
and Detailed Support for Any Recommendations.
4. Late Papers will not be accepted.
5. Your grade will depend on how well
you identify the issues and argue your recommendation.
6. All Footnotes and References Must
use the APA Format.
Group Paper & Presentation
The class will divide into groups
of two to four persons. Your written assignment is as follows:
1. Locate a publicly traded company
in an industry that interests you. Find a publicly traded competitor
which is suitable for a merger or acquisition with this firm.
2. Write a ten page double spaced paper
(not including exhibits) on why the company should be acquired and
what purchase price should be paid. In addition to a hard
copy, a copy of your paper on disk is required. The disk label should
include your topic and all members of your group. Your analysis
should include the "real" reasons behind the merger
and not the standard answers. Major topics should include: A brief
background of the industry which the company operates, a background
on the company and the management team, the acquisition purchase
price (you may want to include a base purchase price and the
maximum purchase price your firm would be willing to pay), what
makes this merger a good fit, a brief strategy on how the company
will operate after the merger, and how the deal would be financed.
3. You have an enormous amount of material to use for this
project. Annual Reports and 10Ks can be obtained by contacting
the company's Investor Services Department.
4. Prepare your presentation as though
it was before the Board of Directors of the company. The class will
be asking specific questions about your analysis, so be prepared.
5. Group participation by each member
is critical to the success of the group. Therefore, each group member
will evaluate each of the other members. I will provide each
member with an evaluation form.
Class Participation
Meaningful class participation is
an important element in case study analysis. Therefore, it is imperative
that students contribute to each class discussion. Please
be prepared each week. Your class participation grade will consist
of two elements: Attendance and Quality Participation.
A Note on Academic Standards
Both myself and Boston University
consider plagiarism a serious academic offense. Any form of plagiarism,
that is, taking the ideas or words of another and presenting
it as your own work, will be passed along to the Metropolitan College
Academic Conduct Review Board.
Schedule
1. January 16
Introduction & Review
2. January 23
Basic Valuation Techniques
DCF & Model Construction
Read: Takeovers: Folklore and Science 84609
Read: Note: Valuing a Business Acquisition Opportunity 9-289-039
3. January 30
Model Construction Con't
Prepare Case: The Takeover of the Norton Company 9-291-002
Prepare Case: VacationSpot.com & Rent-A-Holiday 9-800-334
Read: Lessons from Master Acquirers: A CEO Roundtable R00312
4. February 6
Solicitation
Prepare Case: Philip Morris Companies and Kraft, Inc. 9-289-045
Prepare Case: Mercedes-Benz in Alabama 9-199-028
Read: Choosing Compatible Acquisitions 81109
Assignment Due: A list of the members of your group.
5. February 20
Letter of Intent
Read: Diversification via Acquisition: Creating Value 78408
Prepare Case: Time's Entry into the Entertainment Industry
9-293-117
Prepare Case: The Proposed Merger of HP & Compaq 102-010-1
Assignment Due: Group one page summary of the company to be
analyzed.
6. February 27
Negotiations
Prepare Case: Kraft General Foods: The Merger (A) 9-391-139
Prepare Case: National Medical Care
Read: Strategic Analysis for More Profitable Acquisitions
79409
Read: Making the Deal Real: How GE Capital Integrates Acquisitions
98101
7. March 6
Purchase and Sale Agreements
Prepare Case: Willamette 102-016-1
Prepare Case: Mt. Auburn Hospital 9-397-0
Prepare Case: Aetna 2000
Read: Acquisitions: The Process Can Be a Problem 86203
8. March 20
Insider Trading & Bankruptcy
Prepare Case: Ross Perot and General Motors 9-491-027
Prepare Case: Mebel, Doran & Company 9-287-001
Prepare Case: Trans World Airlines
9. March 27
Prepare Case: Partners Financial Health Care 9-696-062
Prepare Case: Quorum Health Group, Inc. 9-295-156
Prepare Case: Teradyne
10. April 3
Prepare Case: Allen Lane 9-384-077
Prepare Case: MedImmune 102-009-1
Prepare Case: The Acquisition of Consolidated Rail Corporation
9-298-006
11. April 10
Group Presentations
Assignment Due: Final Group Papers
12. April 17
Group Presentations
13 April 24
Group Presentations
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