chapt 6 - takeover tactics

Question 1

list some takeover tactics for mergers

Answer 1

1. bear hugs/ bypass offers
2. tender offers
3. proxy fights
4. streetsweep
5. creeping tender offer

Question 2

explain what affect the choice of takeover tactics (4)

Answer 2

attitude of target mgnmt/board
distribution of voting right
strength of target cie
competing offers

Question 3

2 type of bear hug

Answer 3

teddy bear hug : less threatening (no price, not public)
regular : price and public

Question 4

is proxy fight more expensive then tender offer ?

Answer 4

even tho it is expensive, no

Question 5

explain riskless arbitrage and risk arbitrage

Answer 5

riskless arbitrage = buy/sell same asset in different market and diff price
risk arbitrage = buy share in potential target and sell share in acquirers

Question 6

explain fixed value deal

Answer 6

no doubt about the the value to be paid or receive. uncertainty about the #shares to be issued.

Question 7

explain fixed exchange ratio deal

Answer 7

buyer knows #shares to be issued. but nor the buyer/seller may be happy about the uncertainty of how much the deal is worth.

Question 8

explain floating collar

Answer 8

settle for a little uncertainty with range

Question 9

explain fixed collar

Answer 9

no doubt about payment as long as the buyer’s share price remain in the rang. outside range, gains and losses are shared by both target and buyer