Mergers and Acquisitions

Mergers and Acquisitions Stanmore Ltd is a stock-exchange listed company that operates in the agrichemicals industry. Its market capitalisation is R19,000-million and it has a debt to equity ratio of 20:80. Institutional shareholders hold majority shares. Over the years, the company has maintained a sizeable market share. It has a reputation for products that are less harmful to the environment. However, its growth and innovation have slowed in the past three years, resulting in it introducing fewer new products to the market than usual. At its most recent board meeting, its slow growth and diminishing product innovation were discussed. A number of strategic opinions were debated. Those that gained traction came from three directors: Ms Barbs, who felt that Stanmore Ltd should pursue acquisitions in different sectors. While the company had experienced organic growth, she stated that focusing on the agrichemicals sector alone was too risky. Investing in other sectors would mitigate this risk. Mr Guv disagreed, arguing that Stanmore Ltd should increase shareholder value by focusing on current core business and acquiring other medium-sized companies to accrue synergy benefits in the agrichemical sector. Mr Gilbert agreed with Mr Guv, adding that the medium-sized agrichemical companies that Stanmore Ltd targeted should be those focusing on research and development, and have patents that could be harnessed. In addition, Stanmore Ltd should use real options methodology to appraise potential investments, rather than traditional net present value. Asked by the chairperson to explain this, Mr Guv said real options took into account the fact that there was a certain amount of flexibility in most investments, such as whether to undertake the investment immediately or to delay the decision; to pursue follow-on opportunities; and to cancel an investment opportunity after it had been undertaken. This added value to the investment being considered, he said.2.1 Compare and contrast the justifications behind Ms Barbs and Mr Guvs opinions and discuss the types of synergy benefits that might arise from the acquisition strategy suggested by Mr Guv.(15)2.2 Outline how using real options methodology in conjunction with net present value could help establish a more accurate estimate of the potential value ofcompanies, as suggested by Mr Gilbert.(10)2.3 Explain how the mandatory bid rule and the principle of equal treatment protect shareholders in the event of their company facing a takeover bid.(6)2.4 Discuss the effectiveness of poison pills and disposal of crown jewels as defensive tactics against hostile takeover bids.Do you need a college paper help from professional writersOrder a Similar plagiarism free essay . 100% Guarantee High quality!! Order now by clicking the link below:Setup the Number of pagesspecify the deadlineComplete payment Free features N Outline $5 FREE N Revisions $30 FREE N Title Page $5 FREE N Bibliography $15 FREE N Formatting $10 FREE PLACE AN ORDER NOW Why Choose Us? N Satisfied and returning customers N A wide range of services N 6-hour delivery available N Money-back guarantee N 100% privacy guaranteed N Only custom-written papers N Free amendments upon request N Free extras by request N Constant access to your paper’s writer N A professional team of experienced paper writers N 10+ years of experience in the custom writing market MANAGE ORDERS We accept PLACE AN ORDER NOW