Select one company listed on the ASX or any major international stock exchange. Provide an executive summary on the company’s nature of operations, industry, current financial positions, risk profile and strategic directions.

Task1: Select one company listed on the ASX or any major international stock exchange. Provide an
executive summary on the company’s nature of operations, industry, current financial positions, risk
profile and strategic directions.
Task 2: The CEO of the above company is looking for some expansion opportunities. He/she
approaches the Corporate Finance Division within the company for advice. Suppose you are one of
the analysts in the Corporate Finance team. Your job is to identify a potential takeover target for the
company and outline the reasons why such an acquisition is deemed to be beneficial. Complete a detailed analysis about the takeover deal. Your report should include but not be limited to the following:
a) Provide a brief summary of the target. Classify the type of the takeover deal (e.g. horizontal or vertical), describe the benefits associated with the deal and identify potential sources of synergy.

Calculate the market capitalisation of the target and the synergy, hence advise the
management of the acquiring company on the offer price.

How should the merger be paid for? Cash, stock or a combination of both? Give reasons

Estimate the cost, the NPV of the merger, and the post–merger stock price

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Expectation: Calculate current market cap using publicly available information. Provide an
estimated figure for the synergistic benefits. Synergy often comes in the form of revenue
enhancement and/or cost reduction. In the real world, estimates of synergy involve many
analysts from different departments across the firm. However, the objective of this
assignment is to engage students in an M&A deal from a finance point of view. Therefore,
students will be awarded high marks for this question as long as the synergy estimate is
reasonable given the benefits outlined in part a) and is consistent with the assumptions made.
The offer price depends on the percentage of the estimated synergy that the acquiring
company is willing to pass on to the target shareholders in order to seal the deal. The Key point
is that students will need to make assumptions, justify the assumptions, and come up with an
estimate of synergy and the offer price based on these assumptions.
c) How should the merger be paid for? Cash, stock or a combination of both? Give reasons. (10
marks)
Expectation: Average marks are given to students who can reasonably explain the appropriate
ways for the acquiring company to pay for this takeover. High marks will be given to students
who do extensive research on the M&A literature and are able to apply the findings of the
research to work out whether cash or stock or a combination of the two is more appropriate
for this particular takeover deal.
d) Estimate the cost, the NPV of the merger, and the post–merger stock price. (10 marks)
Expectations: These calculations should be based on your answers to parts b) and c).
Task 3: If the company pays all or part of the acquisition by cash, how should the company finance
the takeover? Should the company raise the capital using internal funds, debt, equity, hybrid securities or a combination of the above? Give reasons

Outline the risk(s) involved with this takeover deal. State your assumptions and perform sensitivity analysis on the NPV of the merger.