Download GTU (Gujarat Technological University) MBA (Master of Business Administration) 2018 Summer 4th Sem 2840201 Mergers And Acquisitions Previous Question Paper
Seat No.: ________ Enrolment No.___________
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA ? SEMESTER 4 ? EXAMINATION ? SUMMER 2018
Subject Code: 2840201 Date:28/05/2018
Subject Name: Mergers & Acquisitions
Time: 02:30 PM To 05:30 PM Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q. No. Answer the following MCQ by selecting a correct Answer
6
Q.1 (a) A merger in which an entirely new firm is created and both the acquired and
acquiring firms cease to exist is called a
1.
A. Divestiture B. Consolidation
C. Tender Offer D. Spin off
2.
A business deal in which all publicly owned stock in a firm is replaced with a
complete equity ownership by a private group is called a
A. Tender Offer B. Proxy Contest
C. Going Private D Leverage Buyout
3.
An attempt to replace management in which a group of shareholders try to
solicit votes is a
A. Tender Offer B. Takeover
C. Proxy Flight D. LBO
4.
The merger of an oil refinery by a chain of gasoline stations is an example of a
A. Conglomerate merger B. Vertical merger
C. Horizontal merger D. White knight
5.
A parent company sold a subsidiary to a group of managers of the subsidiary.
The purchasing group invested $1 million and borrowed $49 million against
the assets of the subsidiary. This is an example of a
A. Spin off B. Joint Venture
C. LBO D. Liquidation
6.
All of the following are potential sources of tax savings in an acquisition
except
A. Unused Debt Capacity B. Net Operating Losses
C. Economies of Scale D. Surplus firm of acquiring firm
Q.1 (b) Answer the following concepts
1. Asset Based Valuation
2. Conglomerate Merger
3. Competition Act 2002
4. Equity Carve out
04
Q.1 (c) If the FCFF of the 8
th
year of cash flow projection is 525 lakhs, which is
expected to maintain a growth of 5% constant growth thereafter and the
WACC is 15.25%. What is the value of the firm?
04
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Seat No.: ________ Enrolment No.___________
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA ? SEMESTER 4 ? EXAMINATION ? SUMMER 2018
Subject Code: 2840201 Date:28/05/2018
Subject Name: Mergers & Acquisitions
Time: 02:30 PM To 05:30 PM Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q. No. Answer the following MCQ by selecting a correct Answer
6
Q.1 (a) A merger in which an entirely new firm is created and both the acquired and
acquiring firms cease to exist is called a
1.
A. Divestiture B. Consolidation
C. Tender Offer D. Spin off
2.
A business deal in which all publicly owned stock in a firm is replaced with a
complete equity ownership by a private group is called a
A. Tender Offer B. Proxy Contest
C. Going Private D Leverage Buyout
3.
An attempt to replace management in which a group of shareholders try to
solicit votes is a
A. Tender Offer B. Takeover
C. Proxy Flight D. LBO
4.
The merger of an oil refinery by a chain of gasoline stations is an example of a
A. Conglomerate merger B. Vertical merger
C. Horizontal merger D. White knight
5.
A parent company sold a subsidiary to a group of managers of the subsidiary.
The purchasing group invested $1 million and borrowed $49 million against
the assets of the subsidiary. This is an example of a
A. Spin off B. Joint Venture
C. LBO D. Liquidation
6.
All of the following are potential sources of tax savings in an acquisition
except
A. Unused Debt Capacity B. Net Operating Losses
C. Economies of Scale D. Surplus firm of acquiring firm
Q.1 (b) Answer the following concepts
1. Asset Based Valuation
2. Conglomerate Merger
3. Competition Act 2002
4. Equity Carve out
04
Q.1 (c) If the FCFF of the 8
th
year of cash flow projection is 525 lakhs, which is
expected to maintain a growth of 5% constant growth thereafter and the
WACC is 15.25%. What is the value of the firm?
04
2
Q.2 (a) Explain the concept and differences between Merger, Takeover and
Consolidation. Discuss in detail the contraction strategies used by
Companies as a Corporate Restructuring.
07
(b) Do Takeover Always succeed? What strategies do target companies
employ to thwart takeover attempts?
07
OR
(b) State the implications of Corporate Restructuring on Companies, Industry
and Market.
07
Q.3 (a) Explain the process of Due Diligence. Does Due Diligence insure against
M & A failure.
07
(b) Discuss & Differentiate LBO and MBO. What are the reasons for LBO
not being so popular?
07
OR
Q.3 (a) Discuss the Companies Act 1956 and 2013 in lieu of Amalgamations in
detail.
07
(b) Why do Companies opt for listing and Delisting? Discuss the norm of
Delisting given by SEBI in detail.
07
Q.4 (a) Discuss in brief the different methods of Valuation. Suggest the most
suitable method for the transactions of M & A considering its benefits in
practical scenario
07
(b) Describe & Differentiate the two methods of valuation in detail. 07
OR
Q.4 (a) Define ESOPs and its types in detail. State the importance of ESOP to
Companies and Employees
07
(b) State the importance of Green field projects in Cross-border
Acquisitions? Also discuss the benefits and failure of Cross Border
Acquisitions.
07
Q.5 A Ltd. is considering merger with B Ltd. A Ltd. shares are currently
traded at INR 20. It has 250000 shares outstanding and its EAT is INR
5,00,000. B Ltd. has 1,25,000 shares outstanding and its current MPS is
INR 10 and EAT is INR 1,25,000. The merger will be effected by
means of stock swap. B Ltd has agree to plan under which A Ltd will
offer the current market value of B Ltd shares.
1. What is the pre merger EPS and P/E of both companies?
2. If B Ltd., P/E ratio is 6.4 what is its current market price? What is
the exchange ratio? What will be A ltd post merger EPS will be?
3. What should be the exchange ratio; if A ltd pre merger and post
merger EPS are to be same?
14
OR
FirstRanker.com - FirstRanker's Choice
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Seat No.: ________ Enrolment No.___________
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA ? SEMESTER 4 ? EXAMINATION ? SUMMER 2018
Subject Code: 2840201 Date:28/05/2018
Subject Name: Mergers & Acquisitions
Time: 02:30 PM To 05:30 PM Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q. No. Answer the following MCQ by selecting a correct Answer
6
Q.1 (a) A merger in which an entirely new firm is created and both the acquired and
acquiring firms cease to exist is called a
1.
A. Divestiture B. Consolidation
C. Tender Offer D. Spin off
2.
A business deal in which all publicly owned stock in a firm is replaced with a
complete equity ownership by a private group is called a
A. Tender Offer B. Proxy Contest
C. Going Private D Leverage Buyout
3.
An attempt to replace management in which a group of shareholders try to
solicit votes is a
A. Tender Offer B. Takeover
C. Proxy Flight D. LBO
4.
The merger of an oil refinery by a chain of gasoline stations is an example of a
A. Conglomerate merger B. Vertical merger
C. Horizontal merger D. White knight
5.
A parent company sold a subsidiary to a group of managers of the subsidiary.
The purchasing group invested $1 million and borrowed $49 million against
the assets of the subsidiary. This is an example of a
A. Spin off B. Joint Venture
C. LBO D. Liquidation
6.
All of the following are potential sources of tax savings in an acquisition
except
A. Unused Debt Capacity B. Net Operating Losses
C. Economies of Scale D. Surplus firm of acquiring firm
Q.1 (b) Answer the following concepts
1. Asset Based Valuation
2. Conglomerate Merger
3. Competition Act 2002
4. Equity Carve out
04
Q.1 (c) If the FCFF of the 8
th
year of cash flow projection is 525 lakhs, which is
expected to maintain a growth of 5% constant growth thereafter and the
WACC is 15.25%. What is the value of the firm?
04
2
Q.2 (a) Explain the concept and differences between Merger, Takeover and
Consolidation. Discuss in detail the contraction strategies used by
Companies as a Corporate Restructuring.
07
(b) Do Takeover Always succeed? What strategies do target companies
employ to thwart takeover attempts?
07
OR
(b) State the implications of Corporate Restructuring on Companies, Industry
and Market.
07
Q.3 (a) Explain the process of Due Diligence. Does Due Diligence insure against
M & A failure.
07
(b) Discuss & Differentiate LBO and MBO. What are the reasons for LBO
not being so popular?
07
OR
Q.3 (a) Discuss the Companies Act 1956 and 2013 in lieu of Amalgamations in
detail.
07
(b) Why do Companies opt for listing and Delisting? Discuss the norm of
Delisting given by SEBI in detail.
07
Q.4 (a) Discuss in brief the different methods of Valuation. Suggest the most
suitable method for the transactions of M & A considering its benefits in
practical scenario
07
(b) Describe & Differentiate the two methods of valuation in detail. 07
OR
Q.4 (a) Define ESOPs and its types in detail. State the importance of ESOP to
Companies and Employees
07
(b) State the importance of Green field projects in Cross-border
Acquisitions? Also discuss the benefits and failure of Cross Border
Acquisitions.
07
Q.5 A Ltd. is considering merger with B Ltd. A Ltd. shares are currently
traded at INR 20. It has 250000 shares outstanding and its EAT is INR
5,00,000. B Ltd. has 1,25,000 shares outstanding and its current MPS is
INR 10 and EAT is INR 1,25,000. The merger will be effected by
means of stock swap. B Ltd has agree to plan under which A Ltd will
offer the current market value of B Ltd shares.
1. What is the pre merger EPS and P/E of both companies?
2. If B Ltd., P/E ratio is 6.4 what is its current market price? What is
the exchange ratio? What will be A ltd post merger EPS will be?
3. What should be the exchange ratio; if A ltd pre merger and post
merger EPS are to be same?
14
OR
3
Q.5 Sasken Communication Technologies Ltd. undertook buy back shares
through tender offer mechanism to repatriate cash to its shareholders in
an efficient manner. 41, 57,000 shares of face value INR 10 each at the
price of INR 260. Total cash INR 108 Crores were offered through
tender offer. Company proposes a 19.48% of number of shares for the
buyback. Actual buyback executed for 36,56,560 shares with the total
cash repatriation of INR 95 Crores. The buyback price was almost equal
to the market value of the shares on date of intimation to stock exchange
of the date of board meeting for considering the proposal of buyback.
Pre buyback shareholding ? Promoters ? 41.10% ? Others ? 58.9%
Post buyback shareholding ? Promoters ? 45.75% ? Others ? 54.25%
Answer the following questions:
1. Describe the rule of SEBI 1998 and 2013 for the buyback in
Indian Stock Markets. Also identify the provision of buyback in
terms of maximum (%).
2. What are SEBI specific exemptions pursuant to buy-back of
shares?
3. Taxation of capital gains in hands of shareholders ? whether
exempt?
4. Discuss in detail the advantages and disadvantages Saksen could
have got with this buyback?
14
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This post was last modified on 19 February 2020