Exhibit 1: Report 1 Description of Potential Acquisition Targets\ \ Potential Target Potential Acquisition Description\ BriscoePharm Firm Develops, manufactures, and markets prescription drugs for humans and animals. BriscoePharm has annual sales of $1.2 million, but only certain BriscoePharm drugs are attractive cash flow generators.\ Carideo \ Firm develops and manufactures oncology and neurology drugs in the United States and abroad. Carideo has annual sales of $1.2 million, and all assets and liabilities would likely be absorbed by Alertron in a potential merger.\ Dillon Biotech \ Firm designs and manufactures analytical instruments used in drug development. Dillon has $3.5 billion in annual sales. A successful acquisition by Alertron would involve combining operations and forming a new company.\ Escarigen Firm is a pharmaceutical company specializing in cardiology medications. Escarigen is well known among heart surgeons and has a blockbuster cholesterol drug called Karlynivus that is well known in the medical community. In an acquisition, Alertron would wan to maintain the successful Escarigen brand and operational structure.\ \ \ Alertrons executive team agrees that the report is helpful for initiating discussion, but decides they need more information concerning the form of each potential acquisition and the most appropriate method of payment. Alertrons management is also concerned whether each potential target would view a takeover attempt as friendly or hostile. Paul Mussara, Alertrons CEO, asks Ozer to prepare second report that specifically describes the transaction characteristics corresponding to teach deal. Ozers second report is show in Exhibit 2.\ Exhibit 2\ Potential Target Optimal Form of Acquisition Method of Payment Attitude \ \ BriscoePharm Asset purchase involving 30% Cash Offering Friendly\ Of BricoePharms assets\ \ Carideo Stock Purchase Securities offering Friendly\ \ \ Dillon Biotech Stock Purchase Mixed Hostile\ \ Escarigen Stock Purchase Cash offering Friendly\ \ \ As Alertron was conducting its analysis, Bhavik Kumar, CEO of Dillon Biotech, hears rumors that Alertron may attempt a hostile takeover of his firm. Kumar calls an emergency meeting with Dillons four executive vice presidents and expresses his concern that Alertron may attempt a bear hug by submitting a merger proposal directly to the board without informing Dillons management. Kumar concludes the emergency meeting by asking each executive vice president to brainstorm defense mechanisms that Dillon could employ before a takeover attempt is made and also defenses that could be employed after a hostile takeover offer.\ \ After intense discussions, Alertron decides that a takeover offer for Carideo would be most beneficial due to the net present value of cost reduction synergies of $600 million that Ozer estimates would result from the merger. Mussara asks Ozer to evaluate the deal based on a stock offer in which Alertron would exchange 0.75 shares of Alertron stock for each outstanding share of Carideo stock. Ozer compiles the information shown in Exhibit 3 for her analysis.\ Exhibit 3: Merger Evaluation Inputs\ Alertron Carideo\ Pre-merger stock price $60 $39\ \ Number of shares outstanding (millions) 150 80 \ \ Pre-merger market value (millions) $9,000 $3,120\ \ Estimated NPV of Cost Reduction Synergies $600 million\ \ Ozer and the rest of the executive management team at Alertron is extremely confident in the $600 million dollar estimate of cost reduction synergies that are likely to result from the merger and feel that the estimate may actually be conservative. However, when analysts at Carideo review the figures, they have a much different opinion and are less certain that $600 million worth of synergies could be realized. While Carideo believes the net present value of synergies from the deal would still be positive, its estimates are much lower than Alertrons.\ \ Carideos management is also concerned that a merger between Alertron and Carideo could face scrutiny from regulators. Although neither firm is the largest in the pharmaceutical industry, their combined market power could raise antitrust concerns. Phillip Wu, an analyst with Carideo, compiles the following table showing the market share of each of the 12 firms in the pharmaceutical industry to determine whether the concerns were valid. Both Alertrons and Carideos management teams decide that if regulators are unlikely to challenge the deal, they will proceed with the necessary steps to complete the merger.\ \ Exhibit 4: Market Share of Firms in the Pharmaceutical Industry\ \ Firm name Market share in Pharmaceutical Industry\ Munnzer Pharmaceuticals 20%\ \ Spencer Corp. 18% \ \ Alertron 15% \ \ Escarigen 12% \ \ Carideo 10% \ \ Faltysygen 7% \ \ Six other Firms Each have 3% market Share\ \ Questions\ 1. Based o