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:
1. 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.
2. 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.
3. 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:
1. Quality of your analysis, evidence of research and the soundness of your arguments and logic.
2. Ability to apply the concepts introduced in the lectures to conduct industry and company analysis and to analyse the deal rationale.
3. 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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