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Assignments must be typed and submitted
before the start of class on the due date (see Calendar
for dates).
Choose one of the following proposed mergers:
- Boston Scientific Corporation (NYSE: BSX)
with Guidant Corporation (NYSE: GDT)
- Johnson & Johnson (NYSE: JNJ)
with Guidant Corporation (NYSE: GDT)
Analyze the proposed merger strategically. Use one or more of the following:
- Perform a SWOT analysis.
- Analyze the firms' competitive positions using Shapiro's sources of
economic value.
- Growth-Share Matrix Analysis
- Porter Model
- Use the Kauppi model (see "Strategic Acquisitions" under
Websites listed on Classnotes
page)
Do the following for your merger:
- Value the merger target, using the framework discussed in class, using
data available from the firm's 10-Ks, as well as any other public sources,
as of March 31, 2006. (Hint: Value it as of Dec. 31, 2005 and then compound
forward to get a March 31 figure.)
- (Don't do this, as of yet.) Use the spreadsheet,
"Value Merge" from Chapter 9 of Bruner (you can find the template
Under Course Documents on the class Blackboard site), to value the merger.
For your merger (BSX and GDT or JNJ and GDT):
- How would you design your offer? (Ignore the fact that BSX has already
won; go back to the time that JNJ and BSX were still fighting over GDT.)
- Use Chapters 18, 19, 20, 21 and 23 from Bruner. (Note that there are
no specific slides relating to Chap. 20 -- nevertheless, we did address
most of the issues from that chapter. Read up, on your own, any parts
that we did not cover in class.
- Address as many issues from Chapter 18, as are relevant. In
addition, answer these questions specifically
- What should be the form of the acquisitive reorganization?
- Should the deal be a cash deal or a stock deal or a combination
- Should it be a merger or a consolidation or a buyout?
- What is the range of deals that will still leave the deal attractive
to both parties. Do an analysis patterned after Chapter 21.
- Would you include any contingent payments? Explain. Include the value
of these contingent payments into your final bid price.
For your merger (BSX and GDT or JNJ and GDT):
- Evaluate synergies, using the "Valuing Synergies" spreadsheet
(you can find the template Under Course Documents on the class Blackboard
site).
Assignments by Topic
- Introduction
- Go to the Wall Street Journal; find an example of a combination.
- Is it a merger or an acquisition?
- Is it a friendly deal or a hostile one?
- Is it a horizontal merger, a vertical merger or a conglomerate
merger?
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