...herrera@mba12.mccombs.utexas.edu Mobile: 512-529-2730 Course Objectives • to introduce the concepts and theories of modern financial management, • to develop an appreciation for the usefulness of these theories for financial decision-making, • to develop the student's financial decision-making skills, • to provide an overview of current financial management theories and practices. Text Required: Corporate Finance by Ross, Westerfield and Jaffe, 9th ed., McGraw-Hill Irwin Supplemental: Financial Management, Concepts and Applications, 3rd ed., 1995, Ramesh K.S. Rao, SouthWestern Publishing Co., Cincinnati, a division of International Thompson. The required chapters will be made available to you (Blackboard and the readings package). Course Structure and Grading The course consists of lectures, homework assignments (not graded), class case discussions, a team-based take-home case final, and four in-class exams. Lectures: The lectures are designed to provide an understanding of the major elements of finance. The emphasis is...
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... * Philippine Competition Act * Established to look into anti-competitive agreements and abuses of dominant position as well as review mergers and acquisitions. * A national competition policy that seeks to promote free and fair competition in trade, industry and all commercial economic activities. * The Philippine Competition Commission. * United States’ Antitrust Laws PROHIBITED ACTS * Anti-Competitive Agreements Agreements between or among competitors where they limit their price of goods to be sold. Another thing is where they fix the price at an auction including bid manipulation and other forms of bidding * Abuse of Dominant Position Constricts the competition between existing entities with their use of power or dominance over the first-hand players in the industry such that they lessen or lower their prices in order to gain more (predatory acts) * Anti-Competitive Mergers and Acquisitions These are movements or acts referring to the tactics usually practiced by big players in the market to extensively prevent, restrict or lessen and manipulate competition. PENALTIES * Chapter IV of the Republic Act under the 1987 Philippine Constitution Administrative fines for the violation of Sections 14 and 15 under Chapter III and also Sections 17 and 20 under Chapter IV of the Act. * Section 29(b) Failure to Comply With an Order of the Commission: An entity which fails or refuses to comply with a ruling, order or decision issued by...
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...Eaton Corporation recently made an acquisition of Cooper Industries. Eaton Corporation was founded in 1911 by Joseph Eaton. Eaton Corporation specializes in diversified power management. Its primary business focus is on the Electrical Sector; however, it does have four other segments in Truck, Aerospace, Hydraulics, and Automobile and has businesses both domestic and international. Eaton has over 72,000 employees worldwide and sells products to more than 150 countries. According to its 2011 annual report, Eaton Corporation reported $16 billion in sales with a profit of $1.3 billion. Cooper Industries was founded in 1833 and like Eaton Corporation; it is a diversified manufacturer of electrical components and tools. “Cooper has seven operating divisions with leading positions and world-class products and brands including Bussmann electrical and electronic fuses; Crouse-Hinds and CEAG explosion-proof electrical equipment; Halo and Metalux lighting fixtures; and Kyle and McGraw-Edison power systems products.” (Eaton to Acquire, 2012). Between the two companies, there is a lot of room to improve their products and meet customer needs. After the acquisition; the new company will continue to make electrical products their primary focus. According to its 2011 annual report, Cooper Industries reported $5.6 billion in revenues and $827.6 million in profits. The acquisition of Cooper Industries by Eaton Corporation is considered to be a win-win move for both companies that are both leaders...
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...customers and business-level strategies is very important because customers are the source of the strategy’s success. It’s imperative that the firm differentiate who the customer will be (market segmentation), what are the customers’ needs, and how the company plans on satisfying the customers’ needs with core competencies. The relationship that a firm develops with its customers creates value and profitability. There are five business-level strategies that a firm can use to create and support its preferred strategic position against competitors. These include cost leadership, differentiation, focused cost leadership, focused differentiation, and integrated cost leadership/differentiation. Chapter 6 discusses these five strategies along with the risks that are associated with each. Chapter 6 discusses corporate level strategies. Corporate-level strategy focuses on the actions a firm takes to achieve a competitive advantage by choosing and managing a collection of different businesses competing in different product markets. These strategies help firms decide on new strategic positions that are expected to increase value. Like business-level strategies, corporate-level is expected to assist the firm with earning above-average returns. Product diversification is an important type of corporate-level strategy. It involves the range of the markets and industries in which...
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...MANAGING CULTURAL INTEGRATION IN CROSS-BORDER MERGERS AND ACQUISITIONS Daniel R. Denison, Bryan Adkins and Ashley M. Guidroz ABSTRACT Cross-border M&A has become one of the leading approaches for firms to gain access to global markets. Yet there has been little progress in the research literature exploring the role that culture may play in the success of these ventures. Poor culture-fit has often been cited as one reason why M&A has not produced the outcomes organizations hoped for (Cartwright & Schoenberg, 2006). Cross-border M&A has the added challenges of having to deal with both national and organizational culture differences. In this chapter we review the literature on cultural integration in cross-border M&A and provide a framework designed to help manage the integration process throughout the M&A lifecycle. This framework presents culture assessment and integration as a crucial component to reducing poor culture-fit as a barrier to M&A success. Mergers and acquisitions (M&A) have become a central part of most corporate growth strategies, and an increasing portion of that M&A activity now spans national borders. Indeed, beyond a certain scale, one might say that all M&A is now cross-border M&A. For example, even a merger Advances in Global Leadership, Volume 6, 95–115 Copyright r 2011 by Emerald Group Publishing Limited All rights of reproduction in any form reserved ISSN: 1535-1203/doi:10.1108/S1535-1203(2011)0000006008 95 96 DANIEL R. DENISON ET AL. between two large...
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...MANAGING CULTURAL INTEGRATION IN CROSS-BORDER MERGERS AND ACQUISITIONS Daniel R. Denison, Bryan Adkins and Ashley M. Guidroz ABSTRACT Cross-border M&A has become one of the leading approaches for firms to gain access to global markets. Yet there has been little progress in the research literature exploring the role that culture may play in the success of these ventures. Poor culture-fit has often been cited as one reason why M&A has not produced the outcomes organizations hoped for (Cartwright & Schoenberg, 2006). Cross-border M&A has the added challenges of having to deal with both national and organizational culture differences. In this chapter we review the literature on cultural integration in cross-border M&A and provide a framework designed to help manage the integration process throughout the M&A lifecycle. This framework presents culture assessment and integration as a crucial component to reducing poor culture-fit as a barrier to M&A success. Mergers and acquisitions (M&A) have become a central part of most corporate growth strategies, and an increasing portion of that M&A activity now spans national borders. Indeed, beyond a certain scale, one might say that all M&A is now cross-border M&A. For example, even a merger Advances in Global Leadership, Volume 6, 95–115 Copyright r 2011 by Emerald Group Publishing Limited All rights of reproduction in any form reserved ISSN: 1535-1203/doi:10.1108/S1535-1203(2011)0000006008 95 96 DANIEL R. DENISON ET AL. between...
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... 1. governance issues of the firm [chap. 1 & lecture] 2. valuation concepts and processes [chap. 3, 5, 8, 9, 29] 3. capital budgeting estimation and decision methods [chap.6, 7] 4. debt, equity and lease financing issues [chap. 14, 20, 21] 5. risk defined and measured in a CAPM setting [chap. 10, 11] 6. variations in the calculation of cost of capital [chap. 13, 18] 7. capital structure and dividend policy decisions [chap. 15, 16, 17, 19] Suggested Other Courses: FIN 644 concerns of short-term financial planning and financing FIN 625 concerns of risk management with derivative securities FIN 620 concerns of multinational financial management Required Text: Ross, S., R. Westerfield, and J. Jaffe, Corporate Finance, current edition, Irwin. Recommended Supplemental Reading: The Wall Street Journal Barron's Value Line Investment Survey Financial Times Major Units of Instruction: Weeks Topics 1 Corporate Governance (extension of concepts from MBA 550) chap. 1 & lecture (Students review Chap. 2 Accounting Statements and Chap. 4 Time Value: these concepts are assumed) Goals and Conflicts Ethical Issues -- The Corporation and Society 2 & 3 Valuation concepts and processes chap. 3, 5, 8, 9, 29 Long-Term Financing and Valuation...
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...Chapter 15, Business Strategy in Asia, Kulwant Singh, Nitin Pangarkar and Loizos Heracleous, 2004 NOL and APL (A) CASE 15 After several years of dismal results, Neptune Orient Lines (NOL) was widely viewed as a laggard. The national shipping line was one of the worst performers among Singapore’s many government-linked corporations. Perhaps the low point was reached in 1996, when industry publication Containerisation International ranked NOL last in a field of 24 shipping firms on return on assets, and 18th in net profit margins. This was in stark contrast to the performance of other government firms, several of which could claim industry-leading performance, reputation and profitability. This poor performance imposed great pressures on NOL to take drastic action. Possibly in reaction, NOL announced in April 1997 that it was acquiring APL, the leading U.S. shipping line. This would be the largest acquisition ever by a Singapore firm and would catapult the firm into the league of major shipping lines. There were some concerns that NOL’s strategy was risky, as it was acquiring a firm larger than itself for a price some observers judged to be excessive. But NOL’s management was confident that it had found a solution to its problems, and that the acquisition of APL would ensure its future success. The future seemed bright. Introduction NOL AND APL (A) NOL Southeast Asia-Australia routes. Its ship charter business, American Eagle Tankers, focused on chartering ships...
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...Group Work and Cases 100 points Good 70-79.9 Participation, Indiv. Cases 100 points Average 60-69.9 TOTAL 400 points Passing 50-59.9 Fail Below 50 Percentage Score 400/4=100 You will be penalized for absence, lack of participation or poor performance on reading assignments case assignments and problem assignments You are required to read the assigned chapters and finish the mini case assignments before the class discussion of the assignments. Additional readings and problems may be assigned as needed to supplement the text book. * EACH GROUP WILL TURN IN SIX WRITTEN CASE FOR GRADING PRIOR TO PRESENTATION. Written Case as well as Presentation will be graded. Individual grade for group work will include peer grading of group members. (100 points). - Grade for participation is based on in class attendance, in class performance in cases and class discussion, peer grading, reading and problem assignments. (100 points) ASSIGNMENT LIST CHAPTERS Dr. Bilici FINANCE 400 I SUMMER 2016 July 25...
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...Chapter 01 - Intercorporate Acquisitions and Investments in Other Entities Chapter 01 Intercorporate Acquisitions and Investments in Other Entities Multiple Choice Questions In order to reduce the risk associated with a new line of business, Conservative Corporation established Spin Company as a wholly owned subsidiary. It transferred assets and accounts payable to Spin in exchange for its common stock. Spin recorded the following entry when the transaction occurred: 1. Based on the preceding information, what number of shares of $7 par value stock did Spin issue to Conservative? A. 10,000 B. 7,000 C. 8,000 D. 25,000 2. Based on the preceding information, what was Conservative's book value of assets transferred to Spin Company? A. $243,000 B. $263,000 C. $221,000 D. $201,000 1-1 Chapter 01 - Intercorporate Acquisitions and Investments in Other Entities 3. Based on the preceding information, what amount did Conservative report as its investment in Spin after the transfer of assets and liabilities? A. $181,000 B. $221,000 C. $263,000 D. $243,000 4. Based on the preceding information, immediately after the transfer, A. Conservative's total assets decreased by $23,000. B. Conservative's total assets decreased by $20,000. C. Conservative's total assets increased by $56,000. D. Conservative's total assets remained the same. During its inception, Devon Company purchased land for $100,000 and a building for $180,000. After exactly 3 years, it transferred these...
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...Barclays Acquisition of Lehman Brothers Background Barclays PLC, one of the main saving banks in the United Kingdom, agreed Sept. 16, 2008, to purchase the volume of Lehman Brothers Inc. for $1.75 billion. It has acquired parts of Lehman's equities commerce in Europe and took on some Lehman workers in Asia. Lehman, the fourth major asset bank in the United States, was one of the victims of the subprime advance disaster that led to the administration stand security of Bear Stearns in March 2008 and the conquest of advance giants Fannie Mae and Freddie Mac by the U.S. Treasury in advance in September of 2007. Worth as much as $45 billion in early 2007, Lehman incurred almost $4 billion in losses in the third quarter has seen its stock worth fall down and was faced with disciplinary downgrades in its credit rating, which would have made it tremendously hard to raise much-needed capital. (Clark, 2008) Fuld who was the Head of Lehman sought Chapter 11 bankruptcy defense for Lehman on Sept. 15 2007 after U.S. Treasury Secretary Henry Paulson made it obvious that the administration would not spend any of taxpayers money to fund any of Lehman’s faulty asset. Under Chapter 11, which shields a corporation from creditors' lawsuits while it reorders its finances, Lehman became more attractive to Barclays; the British bank then bought Lehman's choicest bits devoid of assuming its more than US$600 billion in liabilities. Under the terms of the contract, which got approval from the insolvency...
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...Merger, Acquisitions, and International Strategies: One of the greatest indicators of the success or failure of a corporation is their ability to acquire/merge or to be acquired/merged. Companies have been able to maximize their profits by merging or acquiring other businesses within their industry, which has many benefits that extend past dollars and cents. Corporations who are able to acquire or merge with other companies are able to expand upon their ability to forge partnerships with other corporate leaders. They are often able to expand their services internationally to gain more profits and extend their brand. Corporations, such as McDonald's Corporation, have been able to benefit from acquisitions in ways that corporations, such as Sonic Corporation, have not. Through the evaluation of the strategies that were utilized by McDonald's Corporation to acquire Boston Market, its impact on the corporation, and its international business-level and corporate-level strategies, one can better understand strategies that Sonic Corporation could develop to increase their profits through acquisitions and mergers, as well as business-level and corporate-level strategies they can develop to expand their services internationally. McDonald's Corporation has enjoyed great success as one of the largest food-service retailing chains in the world, with 30,000 restaurants that “operate in more than 100 countries on six continents (Funding Universe, 2012).” Founded in San Bernardino...
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...Management Fall 2009 Non-financial risk assessment in mergers, acquisitions and investments Identifying sources of business risk in the ICT industry Bachelors thesis Erik Allenstr¨m, 1984-11-26 o Fredrik Njurell, 1984-01-30 ¨ Tutor: Osten Ohlsson January 14, 2010 Abstract The number of company mergers and acquisition activities has increased dramatically the last two decades. The reasons for conducting these activities are many and the uncertainties of their results are high. To reduce the uncertainties when making an investment, merger or acquisition it is vital to do a thorough assessment of the risks involved with the activity. This thesis focuses on a specific part of this risk assessment, namely the non-financial risks. Mergers and acquisitions are done in almost all industries around the world and the reasons for and benefits of these activities can vary between industries. We have chosen to investigate the risk assessment of non-financial risks in the Information and Communication Technology (ICT) industry. The thesis aims at investigating what business characteristics, for companies in the ICT industry, that give rise to non-financial risks that must be assessed when doing investments, mergers or acquisitions. Further on we present a risk pattern that points out what business characteristics that are the most important when conducting a risk assessment of non-financial risks on companies in the ICT industry. From a literature study we find evidence that ten different...
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...Mergers and Acquisitions Dr. Daniel Goldsmith BUS -508 Contemporary Business Strayer University February17, 2014 Mergers and Acquisitions Use the Internet to research a publicly traded company in the United States that has undergone a merger or acquisition within the last three years. Take notes on the circumstance surrounding the merger or acquisition. Question1. Examine the circumstances that resulted in the merger or acquisition for the selected company. Speculate on two reasons why the resulting decision to merge or to acquire/ be acquired was made. The bigger is often better in the world of corporate, which may encourage merger and acquisition in general. In fact the result is not always good, some of newly created companies go bankrupt and in some cases, mergers companies disband in a sort of corporate divorce. There are no guaranties in corporate mergers, it is inherently risky and without proper strategy, intuition, and knowledge mergers can easily fail. For instance I will examine the merger of Sears and Kmart and evaluate the merger circumstances and the result of the merger. The merger of the two corporates came as a result of the failing of the legend store Sears in the end of the twentieth century. Sears found itself slowly failing as its competitor’s success of low-end big stores likes Target and Walmart, and high- end department stores like Saks Fifth Avenue. On the other hand Kmart itself was struggling and field chapter 11 bankruptcy...
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...Mergers and Acquisitions Dr. Daniel Goldsmith BUS -508 Contemporary Business Strayer University February17, 2014 Mergers and Acquisitions Use the Internet to research a publicly traded company in the United States that has undergone a merger or acquisition within the last three years. Take notes on the circumstance surrounding the merger or acquisition. Question1. Examine the circumstances that resulted in the merger or acquisition for the selected company. Speculate on two reasons why the resulting decision to merge or to acquire/ be acquired was made. The bigger is often better in the world of corporate, which may encourage merger and acquisition in general. In fact the result is not always good, some of newly created companies go bankrupt and in some cases, mergers companies disband in a sort of corporate divorce. There are no guaranties in corporate mergers, it is inherently risky and without proper strategy, intuition, and knowledge mergers can easily fail. For instance I will examine the merger of Sears and Kmart and evaluate the merger circumstances and the result of the merger. The merger of the two corporates came as a result of the failing of the legend store Sears in the end of the twentieth century. Sears found itself slowly failing as its competitor’s success of low-end big stores likes Target and Walmart, and high- end department stores like Saks Fifth Avenue. On the other hand Kmart itself was struggling and field chapter 11 bankruptcy...
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