Principles of Corporate Finance

Credit Rationing Expected Payoff Expected Payoff to Bank to Ms. Ketchup Project 1 5 10 Project 2 (.5x5) + (.5x0) = +2.5 .5 x (24 ...

u Mergers Principles of Corporate Finance Brealey and Myers Sixth Edition Chapter 33 ...

Topics Covered w Sensible Motives for Mergers w Some Dubious Reasons for Mergers w Estimating Merger Gains and Costs w The Mecha ...

1997 and 1998 Mergers Selling Company Acquiring Company Payment, billions of dollars NYNEX Bell Atlantic 21.0 McDonnell Douglas ...

Sensible Reasons for Mergers Economies of Scale A larger firm may be able to reduce its per unit cost by using excess capacity o ...

Sensible Reasons for Mergers Economies of Vertical Integration ËControl over suppliers “may” reduce costs. ËOver integration can ...

Sensible Reasons for Mergers Economies of Vertical Integration ËControl over suppliers “may” reduce costs. ËOver integration can ...

Sensible Reasons for Mergers Economies of Vertical Integration ËControl over suppliers “may” reduce costs. ËOver integration can ...

Sensible Reasons for Mergers Combining Complementary Resources Merging may result in each firm filling in the “missing pieces” o ...

Sensible Reasons for Mergers Combining Complementary Resources Merging may result in each firm filling in the “missing pieces” o ...

Sensible Reasons for Mergers Mergers as a Use for Surplus Funds If your firm is in a mature industry with few, if any, positive ...

Dubious Reasons for Mergers w Diversification ËInvestors should not pay a premium for diversification since they can do it thems ...

Dubious Reasons for Mergers The Bootstrap Game Acquiring Firm has high P/E ratio ...

Dubious Reasons for Mergers The Bootstrap Game Acquiring Firm has high P/E ratio Selling firm has low P/E ratio (due to low numb ...

Dubious Reasons for Mergers The Bootstrap Game Acquiring Firm has high P/E ratio Selling firm has low P/E ratio (due to low numb ...

Dubious Reasons for Mergers The Bootstrap Game Acquiring Firm has high P/E ratio Selling firm has low P/E ratio (due to low numb ...

Dubious Reasons for Mergers Earnings per dollar invested (log scale) Now Time .10 .067 .05 Muck & Slurry World Enterprises ( ...

Estimating Merger Gains w Questions ËIs there an overall economic gain to the merger? ËDo the terms of the merger make the compa ...

Estimating Merger Gains w Economic Gain Economic Gain = PV(increased earnings) = New cash fdiscount rlows from atesynergies ...

Takeover Defenses White Knight - Friendly potential acquirer sought by a target company threatened by an unwelcome suitor. Shark ...