M&A 2

Question 1

descrizione caso Prysmian

Answer 1

Settore: Cavi elettrici e telecomunicazioni

Competitor principale: Nexans

IPO: 2007, valutazione inferiore ai peer

Strategia: Acquisizioni per aumentare potere negoziale nella distribuzione

Target:

General Cable (USA): presenza geografica

Encore Wire: know-how in cavi di rame

Finanziamento: Leverage, ma senza leverage operativo

Question 2

descrivere caso UBS

Answer 2

Contesto: Settore bancario UE più frammentato e meno profittevole di quello USA

Percorso UBS (dal 2012): Uscita da business capital intensive (retail banking) → focus su Wealth Management

Percorso CS: Scandali, bassa redditività, aumenti di capitale inefficaci

Punto di crisi: 2023, fallimento SVB + dichiarazione saudita negativa → crisi fiducia → fughe di depositi

Deal: forzato

Prezzo: CHF 0.76 per azione

Wipeout AT1 per CHF 70bn

Nessuna DD, nessuna approvazione assembleare

Protezione downside: CHF 25bn, Liquidità: CHF 100bn

Question 3

when does an M&A strategy make sense?

Answer 3

To execute a strategy aimed to value creation when the option to produce or expand through organic means is inefficient.

Question 4

how can an acquisition be financed? what about a merger?

Answer 4

1. Acquisition: either cash, share or mix
2. Merger: equity swap (Merger Ratio)

Question 5

can a merger be hostile? how about acquisition?

Answer 5

No and yes

Question 6

what are the differences between a friendly and hostile takeover?

Answer 6

Friendly: mgmt -> board -> shareholders
Hostile: -> shareholders

Question 7

what is the role of management in a merger?

Answer 7

The role of management in merger is to negotiate the governance and merger ratio, which will affect how much future value created will be attributable to either company.

Question 8

what stopped the rollup drive in europe in the banking sector during the early 2000s? what was the consequence?

Answer 8

In the early 2000s, there were attempts to make deal between European banks. However, there were still weak synergies and political problems which led just to domestic consolidation because they were easier to execute with lower risks. The consequence was that EU banks still could not compete in terms of scale with american ones and continued providing inferior returns to equity.

Question 9

how did the swiss government intervene in the CS transaction? why?

Answer 9

It was a De-Risked Transaction because it was really important to close the transaction before the opening of the mkt for the stability of the system (no execution risk):
- No due diligence ( CS valued 3 billion in a way it was easy to communicate)
- No anti-trust
- It was wiped out 70 billion of AT1
- It was given a 25 billion downside protection to support UBS
- No competitive auction
- No EGM
- 100B CHF of liquidity support provided by the GOV.

Question 10

was the UBS deal good? what’s the takeaway?

Answer 10

yes, after 1 year results were good. last word is always in the hands of the regulator.