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Business Administration
Business Administration 1220E
Maria Ferraro

TAKEOVERS “Transfer of control from one ownership group to another” - The terms mergers, acquisitions, and takeovers, are often used in different ways - Acquisition: - One acquiring firm or bidder completely absorbs another target firm. - Acquiring firm retains identity, while the acquired firm ceases to exist. - Key idea: the disappearance of the purchased firm as all senior management functions reside with the acquirer. - Most acquisitions are made through - Not always obvious: e.g. Although it was announced two companies, ATI and AMD, were joining together and that it was a new company, the fact is that AMD purchased ATI. We know this 1. Because ATI’s shares were delisted from the TSX and on AMD website, ATI is listed as the “graphics of media processes” division of AMD Cash Transactions: the shareholders in the target company receive cash for their shares - When one company acquires another: approval of the target company’s shareholders is required, since they have to agree to sell their shares. - In an acquisition: shareholders of the acquiring company do not normally have to give their approval - Buying another company is regarded as the same as buying a new piece of equipment or any other purchase. - If there is some specific provision in the company’s charter do the shareholders of the acquiring firm get to vote on whether or not the company should make the acquisition. Share Transaction: alternative to cash transaction, where the acquiring company offers shares or some combination of cash and shares to the target company’s shareholders. - In contrast to Cash Transaction, a share transactions requires the approval of the acquiring firms shareholders - Whether it does or does not require approval depends on whether the firm has a limit on the authorized share capital. - If the share holders share capital is limited and it wants to offer shares that exceed this limit, then shareholder approval is needed. - To get around this: most companies have sought and received shareholder approval to issue an unlimited number of shares, however, this does point to the most basic distinction between merger and an acquisition Merger: - Usually the combination of two firms into a new legal entity - Not always obvious eg. Benz and Chrysler announced they were combining as a “merger of equals”. Companies was a hybrid of the merging firms names and indicated that it was an integration of the two companies with neither dominant. Appeared if nothing had changed until it was announced that the merger was in fact a takeover or acquisition of Chrysler. - In a merger a new company is created - Both sets of shareholders have to agree to exchange their existing shares for shares in the new company - A genuine merger is a transaction that requires BOTH set of shareholders to approve the transaction also known as: Amalgamation in Canada. - The two companies approve amalagamation Final Exam Information MOS1023 (4 options not 5) - 80 Questions - 15 True/False - 65 Multiple choice - assigned readings AND lecture material - Additional office hours will be posted prior to the exam date - Will monitor discussion board - Not responsible for US legislation but ARE responsible for Ontario Legislation - Bring: student card, quiet food, pencils only, beverage, quiet food, sweater - Monday December 10 . 7pm to 9pm (Please ensure you go to your assigned exam room as seating may be limited) - Room 2028 SSC Corporate Governance Introduction & Definitions - Early developments underscored the need to ensure that management acts in the sustainable well-being of the company and its shareholders. - Late 1990’s and early 2000’s reinvigorated interest in effective corporate governance to protect shareholders & stakeholders (ie. Creditors, employees, customers) from managerial misconduct and corporate wrongdoing
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