This part of the assignment requires you to read a news announcement about a merger or acquisition of a company to perform a variety of tasks of analysis and write up your finding in a report format. The relevant case study including link to website for more details about the event will be provided on Moodle.
You will be encouraged to conduct research on the effects of the news on share price:
• Conduct in-depth background research to enhance the analysis of the acquisition event. Such research should demonstrate in-depth understanding on the working of the sector. You should set up a timeline to reflect the chronicle of events based on key dates.
• Conduct comprehensive valuation on the acquired firm prior to the acquisition announcement. Your valuation should use relevant valuation technique(s) to arrive at an appropriately discounted present value (per share) for both companies.
• Evaluate the extent of price impacts on both companies following the news announcements on acquisition. Does the movement of share price reflect the insights from Efficient Market Hypothesis (EMH)?
• Timeline: from the date of announcement to months post event announcement.
Organize your findings in a Report format according to the weight presented. The length should be no longer than 2,500 words. The minimum length of your report should be no less than 1500.
You need to provide data and valuation result in Excel format as evidence in the appendix. Your Excel file also needs to be submitted via the same Moodle Submission Link for the coursework so that we can comment and verify your model based on your submitted paper.
Tables, diagrams, references and appendixes will not be included in the final word count.
Indicative Relevant Course Concepts
(to be applied)
Indicative Research Resources
(a lot more electronic resources at your disposal in the library)
Capital Structure
Cost of Debt
Cost of Equity
WACC
CAPM
Interest tax shield
Stock & Sector Beta
Efficient Market Hypothesis
Past, public & private information
Standard & Poor’s
Moody
Bloomberg – need an account to use the terminal
Sector Beta from NYU – Professor Damodaran http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/wacc.htm
Bloomberg – need an account to use the terminal
National website of government departments or public information gateway on insurance sector regulation
Financial Times (FT)
Bloomberg
Morningstar
Yahoo Finance (UK)
Sample Solution
