How should Vietnam gauge the proposed cross-border acquisition described in problems 4 and 5?

a. What are the costs and benefits of Ciments Lafarge’s proposed acquisition on Vietnam’s balance of payments?

b. What are the costs and benefits of Ciments Lafarge’s proposed acquisition on Vietnam’s gross domestic product?

c. How is your analysis evolving over time? What could the acquirer do to maintain a positive costs/benefits ratio?

Data from problem 4

Referring to Ciments Lafarge’s acquisition, explain how the valuation of the Hoang Thach Cement Company would differ if instead of an all-cash deal the transaction had been financed with a VND 1 billion loan from the State Bank of Vietnam at a subsidized interest rate of 10 percent to be amortized over five years.

Data from problem 5

Which cost of capital? Guillaume Tel of Ciments Lafarge was unsure about the legitimacy of applying a discount rate of 10. 5 percent to value the acquisition of Hoang Thach Cement Company. After all, Ciments Lafarge’s company-wide WACC was estimated at 9 percent and the country risk premium applied to Vietnam was set at 365 basis points.