TACC613 Mergers and Acquisitions Term 2 2021
Individual Assignment Guidelines
Deal Rationale
[10 marks]
Due Date: Friday, September 3, 2021, by 6:00 PM via Turnitin on Moodle.
For this assignment, you should analyse the merger between Nine Entertainment Co. (ASX: NEC) and Fairfax Media Ltd. (ASX: FXJ) announced on 26/07/2018:
https://www.asx.com.au/asxpdf/20180726/pdf/43ws6ypcbz1d7j.pdf
You should analyse the deal based on the information available at the time of the deal announcement.
The assignment write-up should be 1,000 – 1,200 words long (up to 3 pages long). You must include the word count of your report at the beginning of the write-up.
You can add two more pages of appendices of tables and graphs.
• You have to make your own graphs and tables.
o You should not copy graphs and tables from other sources.
You should include a list of references: this will not count towards the page limit.
Your write-up should be organised in three sections as detailed below:
- Overview of the acquirer (Nine) and the target (Fairfax)
? This will include description of the businesses and segments of the acquirer and the target. Size of the businesses and segments should be included in the description. - Industry (external) analysis and company (internal) analysis: [Use concepts from lecture 2 for this part.]
? The industry analysis should focus on regulatory, structural and/or cyclical changes and industry trends that are affecting the industry and how these are affecting the businesses of the acquirer and the target.
? Company analysis should include both qualitative and quantitative analysis. Financial analysis of the recent (last 5 years) performance of the acquirer and the target should be included. - Deal rationale: Using tools and concepts from lecture 1 (and the three slides on synergy in lecture 3), describe the motivations and the rationale for the deal.
o What are the sources of synergy and value creation? Be specific and detailed and use the terminology introduced in the lecture. o What other objectives/reasons are behind the deal?
o Are there bad reasons for the deal? 1
Term 2 2021 TACC613 Mergers and Acquisitions
o Try to link the deal rationale with the industry/company analyses above.
? How does the current deal fit with the acquirer’s business plan — i.e., is this deal a good
‘strategic fit’ for the acquirer?
? Does the deal make sense in a long-term or ‘strategic’ sense?
• The bullet-points above are given as a guide to organise your write-up. o You may want to use other concepts/frameworks from lectures 1 & 2, including the annex slides, in your write-up.
• Please be aware that all factors are not equally important in all deals, so try to identify the factors that are important for this deal.
o Try to think what is the strategic challenge facing the industry and the firm, and what are the major reason(s) for this particular deal. Then organise your write-up so the analyses support your conclusions on these issues.
• Your write-up should be based on thorough research. You should use all of the following sources to gather the necessary background information:
o Bidder and target’s annual reports, company announcements and the Scheme Booklet — these are available from ASX: https://www2.asx.com.au/markets/trade-our-cash-market/todaysannouncements
o Scheme Booklet: https://www.asx.com.au/asxpdf/20181012/pdf/43z6rk36t9k31h.pdf o You should also consult the ASX announcements of the bidder and the target around the proposal of the deal.
o News articles about the industry and mergers in the industry and about the bidder and the target.
? You can use google search to find relevant articles.
Assessment Criteria:
• The following criteria will be used to assess the assignment: - Quality of your analysis, evidence of research and the soundness of your arguments and logic.
- Ability to apply the concepts introduced in the lectures to conduct industry and company analysis and to analyse the deal rationale.
- Clarity of writing, quality of presentation and the use of graphs and tables to support your analysis and argument.
• Some additional guidelines: o You should support your arguments and claims with evidence: figures, tables and graphs.
o Your analyses should build up to a conclusion, and should not be just a series of unconnected observations and statements.
o You should not include any information that is not relevant for your arguments and conclusions. o The language of the report should be clear, concise, coherent and grammatically correct
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