Mergers and takeovers mean the activities that two or more businesses join together and
【M1】
【M1】
A、helping firms that want to acquire another firm locate a firm to pursue.
B、helping would-be acquirers solicit shareholders through a tender offer.
C、helping target firms ward off undesired takeover attempts.
D、all of the above.
E、only A and B of the above.
Mergers and Acquisitions
Mergers and Acquisitions refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling and combining of different companies that can aid, finance, or help a growing company in a given industry grow (21) without having to create another business entity.
In business or economics a merger is a (22) of two companies into one larger company. Such actions are commonly (23) and involve stock swap or cash payment to the target. Stock swap is often used as it allows the shareholders of the two companies to (24) the risk involved in the deal. A merger can resemble a takeover but result (25) a new company name and in new branding; in some cases, (26) the combination a "merger" rather than an acquisition is done purely for political or marketing reasons.
An acquisition, also known as a takeover or a buyout, is the buying of one company by another. An acquisition may be friendly or hostile. In the (27) case, the companies cooperate in negotiations; in the latter case, the takeover target is (28) to be bought or the target's board has no prior knowledge of the offer. Acquisition usually refers to a purchase of a smaller firm by a larger one. Sometimes, (29) a smaller firm will acquire management control of a larger or longer established company and keep its name for the combined entity. The acquisition process is very complex, with many dimensions influencing its (30) .
(21)
A.rapidly
B.slowly
C.confidently
D.steadily
Takeover hostility
Acquisitions of Chinese enterprises by foreign companies are increasingly being challenged amidst a growing mood of "economic patriotism."
The former National Bureau of Statistics Commissioner Li Deshui is one of the most prominent of the critics. During last month's session of the National People's Congress(NPC. the country's law-making body, he warned that the acquisition of promising local companies by multinational investors was creating monopolies in a number of sectors.
"If China lets multinationals' malicious mergers and acquisitions go ahead freely, China can only act as labor in the global supply chain," said Li, worrying that Chinese brands and the innovation ability of the national industry would disappear gradually and core parts, key technologies and high value added of China's leading enterprises might be completely controlled by multinationals."
His pointed criticism generated wide media exposure and created fears of a foreign mergers and acquisitions(M&A) threat.
Several factors have contributed to the climate, including national pride, lingering resentment over Chinese oil giant CNOOC's failed US $18 billion bid for Unocal last year, and a protectionist resurgence, partly in response to a growing protectionist sentiment in the United States and Europe against low-cost Chinese exporters.
"These emotions about foreign capital are the last thing we want," says Fei Guoping, director of the China Mergers & Acquisitions Association under the All-China Federation of Industry and Commerce.
"Such unwarranted enthusiasm will only hurt the country's economic development. What we want is to make sane progress in building an M&A review system based on national economic security," says Fei, who is the chief writer of a proposal on such a review system submitted by the federation to the NPC last month.
While the Chinese Government welcomes foreign investment, through M&As or otherwise, the explosive increase in FDI has given multinationals a degree of market power that many Chinese find worrying and potentially damaging to the development of domestic enterprises.
However, if the worry is directed at the scale of foreign investment, it is missing the target, says Fei, who believes the key point is the absence of a law and a government body to look at possible M&As that may hurt national security.
In China, some department regulations involve M&A reviews and several government bodies have the power to look at parts of the M&A cases.
The Ministry of Commerce(MOFCOM)) and the National Development and Reform. Commission(NDRC) are entrusted with the primary responsibility of supervising foreign-related M&A transactions. The former is the principal foreign investment regulator while the latter is responsible for approving the foreign investment project application.
The nature of the target may lead to the involvement of other regulators. The State-Owned Assets Supervision and Administration Commission plays a significant role in transactions involving State-owned enterprises. The China Securities Regulatory Commission, which is responsible for monitoring and regulating China's capital markets, will be involved in transactions linked to listed companies.
There is a higher level of government participation in M&As in China than is typical in other countries, says an official from skincare company L'Oreal, which acquired local brand Mininurse.
"Despite the recent relaxation of foreign investment restrictions, pervasive approval requirements re- main a distinctive feature of M&A transactions in China," says the official, who did not want to be named.
While the complicated M&A review process often scares away potential investors, few efforts are made dur
A.Y
B.N
C.NG
Companies have embarked on what looks like the beginnings of a re-run of the mergers and acquisitions (M&A) wave that defined the second bubbly half of the 1990s. That period, readers might recall, was characterized by a collective splurge that saw the creation of some of the most indebted companies in history, many of which later went bankrupt or were themselves broken up. Wild bidding for telecoms, internet and media assets, not to mention the madness that was Daimler's $40 billion motoring takeover in 1998—1999 of Chrysler or the Time-Warner/AOL megs-merger in 2000, helped to give mergers a thoroughly bad name. A consensus emerged that M&A was a great way for investment banks to reap rich fees, and a sure way for ambitious managers to betray investors by trashing the value of their shares.
Now M&A is back. Its return is a global phenomenon, but it is perhaps most striking in Europe, where so far this year there has been a stream of deals worth more than $600 billion in total, around 40% higher than in the same period of 2004. The latest effort came this week when France's Saint-Gobain, a building-materials firm, unveiled the details of its 3.6 billion ($6.5 billion) hostile bid for BPB, a British rival. In the first half of the year, cross-border activity was up threefold over the same period last year. Even France Telecom, which was left almost bankrupt at the end of the last merger wave, recently bought Amena, a Spanish mobile operator.
Shareholder's approval of all these deals raises an interesting question for companies everywhere: are investors right to think that these mergers are more likely to succeed than earlier ones.'? There are two answers. The first is that past mergers may have been judged too harshly. The second is that the present rash of European deals does look more rational, but—and the caveat is crucial—only so far. The pattern may not hold.
M&A's poor reputation stems not only from the string of spectacular failures in the 1990s, but also from studies that showed value destruction for acquiring shareholders in 8.0% of deals. But more recent studies by economists have introduced a note of caution. Investors should look at the number of deals that succeed or fail (typically measured by the impact on the share price), rather than (as you might think) weighing them by size. For example, no one doubts that the Daimler-Chrysler merger destroyed value. The combined market value of the two firms is still below that of Daimler alone before the deal. This single deal accounted for half of all German M&A activity by value in 1998 and 1999, and probably dominated people's thinking about mergers to the same degree. Throw in a few other such monsters and it is no wonder that broad studies have tended to find that mergers are a bad idea. The true picture is more complicated.
According to the text, a collective opinion on the mergers and acquisitions also concentrates on______.
A.economic recession
B.value destruction
C.potential hazards
D.asset proposition
— Which company (A, B, C or D) does each sentence 1 - 7 refer to?
— For each sentence 1 - 7, mark one letter (A, B, C or D) on your Answer Sheet.
— You will need to use some of the letters more than once.
A
Tour operator Jarmin Travel is waiting for its chief executive and finance director to make the final decision before making a formal bid for rival HarmonAir. The two companies tried to merge five years ago, when the deal was blocked by the competition authorities. Since then the regulator has eased the criteria by which any merger would be judged. Competition lawyers say a tie-up would almost certainly be allowed this time, and industry analysts believe that both companies are eager for a merger.
B
Bus operator Barkway has been hit by stiff competition and dwindling profitability. As a result the company has been forced to scrap its plans to expand overseas and instead will concentrate on growing its existing business. The continuing decline in the company's share price has led to speculation that it may fall prey to one of its rivals. This may well prove wrong), though, as Barkway's founder and chief executive, Kerry Matthews, has persuaded the board to do everything in its power to resist a takeover.
C
Carolyn Swaine, the former chief executive of coffee shop chain Marshmont's, is trying hard to raise capital for a bid for her old company. Swaine left last year after a series of disagreements over Marshmont's future direction, and several top managers are expected to leave if she succeeds in buying the chain. Although Marshmont's is profitable, it is too small to stay independent for much longer, and even if Swaine takes control, the company will soon have to become part of a larger chain.
D
Keston, the respected maker of television programmes, has announced that it has agreed an outline deal to merge with Stardust TV. A year ago, with its profits plunging, Keston faced a strong takeover bid by another of its competitors, but fought hard against it, and has since become more profitable. The company is now convinced, however, that its future success lies in being part of a larger organisation. Both Keston and Stardust have a reputation for producing striking television programmes, and a merger is likely to be beneficial, both creatively and financially.
This company has changed its attitude towards remaining independent.
A.cquisition
B.takeover
C.liquidate
D.merger
A.vindicated
B.plaintiff
C.takeover
D.insolvency
How to approach Reading Test Part One
&8226;In this part of the Reading Test you match seven statements with four short texts.
&8226;First read each short text and then read the sentences to see which ones refer to the text.
&8226;Make sure you read each text for overall meaning. Do not choose an answer just because you can see the same words in the text.
&8226;Look at the sentences below and the information about mergers and takeovers involving four companies on the opposite page.
&8226;Which company (A, B, C or D) does each sentence 1 - 7 refer to?
? For each sentence 1 - 7, mark one letter (A, B, C or D) on your Answer Sheet.
? You will need to use some of the letters more than once.
A
Tour operator Jarmin Travel is waiting for its chief executive and finance director to make the final decision before making a formal bid for rival HarmonAir. The two companies tried to merge five years ago, when the deal was blocked by the competition authorities. Since then the regulator has eased the criteria by which any merger would be judged. Competition lawyers say a tie-up would almost certainly be allowed this time, and industry analysts believe that both companies are eager for a merger.
B
Bus operator Barkway has been hit by stiff competition and dwindling profitability. As a result the company has been forced to scrap its plans to expand overseas and instead will concentrate on growing its existing business. The continuing decline in the company's share price has led to speculation that it may fall prey to one of its rivals. This may well prove wrong), though, as Barkway's founder and chief executive, Kerry Matthews, has persuaded the board to do everything in its power to resist a takeover.
C
Carolyn Swaine, the former chief executive of coffee shop chain Marshmont's, is trying hard to raise capital for a bid for her old company. Swaine left last year after a series of disagreements over Marshmont's future direction, and several top managers are expected to leave if she succeeds in buying the chain. Although Marshmont's is profitable, it is too small to stay independent for much longer, and even if Swaine takes control, the company will soon have to become part of a larger chain.
D
Keston, the respected maker of television programmes, has announced that it has agreed an outline deal to merge with Stardust TV. A year ago, with its profits plunging, Keston faced a strong takeover bid by another of its competitors, but fought hard against it, and has since become more profitable. The company is now convinced, however, that its future success lies in being part of a larger organisation. Both Keston and Stardust have a reputation for producing striking television programmes, and a merger is likely to be beneficial, both creatively and financially.
This company has changed its attitude towards remaining independent.
In relation to the Securities Law of China:
(a) explain a takeover by offer of a listed company; (3 marks)
(b) explain what happens after the expiration of the duration of the takeover by offer. (7 marks)
A.breakout
B.takeover
C.shakeout
D.downside
(c) (i) Explain the capital gains tax (CGT) implications of a takeover where the consideration is in the form. of
shares (a ‘paper for paper’ transaction) stating any conditions that need to be satisfied. (4 marks)
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