Business Finance
Mergers & Acquisitions Assignment

Question Description

I don’t understand this Business question and need help to study.

In considering the two very different stories of M&A deals presented in Chapter 1 (Pfizer’s acquisition of publicly traded Pharmacia and Nestlé’s purchase of privately held Chef America), answer the following questions with respect to each of these two deals.

1. Who is the Target?

Who is the Bidder?

2. Does this deal present any antitrust concerns? Will this deal require any other regulatory approvals?

3. How will investors in Bidder Co. learn of the proposed acquisition of Target Co.? How will investors in Target Co. learn of the proposed sale of their company?

4. In the case of the Pfizer-Pharmacia deal, what is the nature of management’s concern as to the market’s reaction to the public announcement of this proposed transaction between Pfizer and Pharmacia? How will management gauge the market’s reaction? Why is management worried about the market’s reaction to the deal when it gets announced? Why is this concern not mentioned in the press coverage of Nestlé’s acquisition of Chef America?

5. What is the acquisition consideration? In other words, what is Bidder offering to pay to acquire Target?

6. Why does Bidder want to buy Target? What business objective is to be served by making this acquisition? Is Bidder a strategic or financial buyer?

7. What is the business incentive for Target to engage in this deal? Why is Target willing to let itself be acquired?

8. What does each company hope to accomplish in the due diligence process? What will (actually) be done during the course of this due diligence process?

9. What will happen when Pharmacia “spins off” — that is, divests itself of — the stake it holds in Monsanto?

10. In describing the deal between Pfizer and Pharmacia, the financial press referred to Hassan as selling “his company.” In what sense is Hassan selling “his company”? In what sense is Hassan not selling “his company”? Along these same lines, in what sense is Paul Merage selling “his company”?

Submission Instructions : Submit your written responses to the Unit 1 by attaching the report file in the Assignment Files of this lesson.

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Final Answer

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Mergers and Acquisition Assignment
In the Pfizer/Pharmacia M&A deal, Pfizer is the bidder and Pharmacia the target
In the Nestle/Chef America M&A deal, Nestle is the bidder, and the Chef America is the target.
Even though Pfizer should get a great value out of the assets owned by the target, both companies
contain products that overlap each other, hence possessing a couple of antitrust concerns to the
companies. The deal might require regulatory approval from antitrust agents to safeguard the states
of the surviving and disappearing companies.
The Nestle/Chef America deal does not possess antitrust concerns and will hence not require any
other regulatory approvals.
Because the Bidder company will have to file an annual report, quarterly report and special reports
for s...

Carnegie Mellon University

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