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