Questions from textbook
Mergers, Acquisitions, and Other Restructuring Activities, 7th Edition
ISBN-13: 9780123854872
Author(s): DePamphilis, Donald
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Case Study 1.1 Google Acquires Motorola Mobility in a Growth-Oriented as well as Defensive Move

Discussion Questions:
1: In What sense is Motorola Mobility's role in this transaction unclear? Identify sources of synergy between Google and Motorola

Mobility. What factors are likely to make the realization of this synergy difficult? Be specific.

2: Using the motives for mergers and acquisitions described in Chapter 1, which do you think apply to Google's acquisition of

Motorola Mobility? Be specific

3: Speculate as to why the share price of Motorola Mobility did not increase by the full extent of the premium and why Google's

share price fell on the day of the announcement.

4: Speculate as to why the shares of other handset manufacturers jumped on the announcement that Google was buying Motorola

Mobility. Be specific.

5: How might the growing tendency for technology companies to buy other firms' patents affect innovation? Be specific.
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Case Study 2.2 The Importance of Timing: The Express Scripts and Medco Merger

Discussion Questions
1: Why do you believe that US antitrust regulators approved the merger despite the large increase in industry concentration?

2: Did the timing of the proposed merger between Express Scripts and Medco help or hurt the firms in obtaining regulatory approval?

Be specific.

3: Speculate as to how the Express Scripts-Medco merger might influence the decisions of their competitors to merge? Be specific.
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Case Study 3.1 Teva Acquires Cephalon in a Hostile Takeover

Discussion Questions:
1: What were the motivations for Valeant and Teva to be interested in acquiring Cephalon?

2: Identify the takeover tactics employed by Valeant and Teva. Explain why each was used.

3: What alternative strategies could Valeant and Teva have pursued?

4: Identify the takeover defenses employed by Cephalon. Explain why each was used.

5: What does the reaction of investors tell you about how they valued the combination of either Valeant or Teva with Cephalon?

Bespecific

6: Why do the shares of acquiring companies tend to perform better when cash is used to make the acquisition rather than equity?
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Case Study 11.3 Swiss Pharmaceutical Giant Novartis Takes Control of Alcon

Discussion Questions:
1. Speculate as to why Novartis acquired only 25% ownership stake in Alcon in 2008.

2. Why was the price ($181 per share) at which Novartis exercised its call option in 2010 to increase the stake in Alcon to 77% so

much higher than what it paid ($143 per share) for an approximate 25% stake in Alcon in early 2008?

3. Alcon and Novartis shares dropped by 5% and 3% respectively, immediately following the announcement that Novartis would exercise

its option to buy Nestle's majority holdings of Alcon shares. Explain why this may have hapened.

4. How do Swiss takeover laws compare to comparable U.S. laws? Which do you find more appropriate, and why?

5. Discuss how Novartis may have arrived at the estimate of $137 per share as the intrinsic value of Alcon shares. What are the key

underlying assumptions? Do you believe the minority shareholders should receive the same price as Nestle? Explain your answer.
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Case Study 12.1 Energy Transfer Outbids Williams Companies for Southern Union - Alternative Bidding Strategies

Discussion Questions:
1. If you were a Southern shareholder, would you have found the Williams or the Energy Transfer Equity bid more attractive? Explain

your answer.

2. The all-cash Williams bid was contingent on the firm's completing full due diligence on Southern Union. How might this represent

a potential risk to Southern's shareholders?

3. Energy Transfer Equity transformed Southern Union's pipleline assets into its primary master limited partnerships in order to

finance a portion of the purchase price. In what way could this action be viewed as a means of financing a portion of the purchas

eprice? In what way might this action have created a tax liability for Energy Transfer Equity?

4. What do you believe are the key assumptions underlying the Energy Transfer Equity and the Williams valuation of Southern Union?
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Case Study 13.1 Hollywood's Biggest Independent Studios Combibe in a Leveraged Buyout

Discussion Questions:
1. What about Lionsgate's acquisition of Summit indicates that this transaction should be characterized as a leveraged buyout? How

does Lionsgate use Summit's assets t help finance the deal? Be specific.

2. How are the $34.6 million in fees and expenses associated with the transaction paid for (see Table 13.4)? Be specific.

3. Speculate as to why Lionsgate refinanced as part of the transaction the existing Summit Term Lioan B due in 2016that had been

borrowed in the early 2000s

4. Do you believe that Summit is a good candiate for a leveraged buyout? Explain your answer.

5. Why is Summit Entertainment organized as a limited liability company?

6. Why did Lionsgate make an equity contribution in the form of cash and stock to the Merger Sub rather than making the cash portion

of the contributed capital in the form of a loan?
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Case Study 14.2 HCA Goes Public.... Again

1. The private equity investors in HCA decided in 2010 to declare dividends totaling $4.3 billion financed with HCA borrowings.

Presumably, if the additional borrowing had not taken place, the firms' leverage would have been lower prior to the IPO in March

2011 and the potential IPO share price could have been higher. If you were a private equity fund manager, would you have decided to

pay a dividend or to have allowed HCA's leverage to decline further in anticipation of the IPO?

2. Based on what you know about HCA and the outlook for teh U.S. healthcare industry, in what sense do you believe HCA was on

attractive LBO candiate and in what sense was it not? Be specific.

3. Critics of LBOs often argue that such transactions contribute little to society and serve only to enrich the financial sponsor.

Do you agree or disagree with this treatment? Supply your conclusion.

4. HCA had a negative shareholders' equity at the end of 2010 of $(11.93)billion, just prior to the IPO, making the firm technically

insolvent. Nonetheless, the investor response to the IPO was highly enthusiastic. Why do you believe this was the case?

5. Assume you are a private equity investor responsible for designing the optimal capital structure for a firm you intend to acquire

through a leveraged buyout. What factors would you take into consideration in constructing the optimal capital structure? Be

specific.