GUJARAT TECHNOLOGICAL UNIVERSITY
MBA - SEMESTER- IV EXAMINATION — WINTER 2019
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Subject Code: 2840201 Date: 30-11-2019
Subject Name: Mergers & Acquisition
Time: 2.30 PM to 5.30 PM Total Marks: 70
Instructions:
- Attempt all questions.
- Make suitable assumptions wherever necessary.
- Figures to the right indicate full marks.
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Q.1 (a) Which of the following restructuring activities does not result in an expansion of a firm? 06
- A. Joint Ventures B. Mergers
C. Divestitures D. Acquisitions - Which of the following activities does not involve a change in the ownership structure?
A. Share Repurchase B. Going Private
C. Leveraged Buyout D Proxy Contest - Which of the following is referred to as “a going private transaction” initiated by incumbent management?
A. Management Buyout B. Leveraged Cash out--- Content provided by FirstRanker.com ---
C. Management Buy-in D. Leveraged Recapitalization - A transaction which forms one economic unit from two or more previous units; is called
A. Joint Venture B. Merger
C. Corporate Control D. Divestiture - Firm 'X' plans to sell off a part of the firm via an equity offering to outsiders. Which of the following means shall be applied by the company for executing its plan?
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A. Equity Carve-out B. Spin-off
C. Split-Up D. Divestiture - Changes in the company byelaws to make the acquisition of a company more difficult or more expensive are referred to as
A. Takeover Amendments B. Anti-takeover
C. Corporate Control D. Proxy Contests
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Q.1 (b)
- Book Value 04
- Spin-off
- Parachute
- Takeover
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Q.1 (c) Write a note on Joint Venture
Q.2 (a) What is Corporate restructuring? What are the different motives of restructuring? 07
(b) Discuss the provisions related to Mergers and Acquisition given in Income Tax Act, 1961. 07
OR
(b) Briefly discuss the important provisions of SEBI guidelines related with Share Buyback for Indian companies. 07
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Q.3 (a) What are the advantages & disadvantages of ESOP? 07
(b) “Mergers create benefits of economies of scale and synergy” discuss this statement? 07
OR
Q.3 (a) Discuss reasons and types of Strategic Alliance? 07
(b) Discuss provision related to the powers of court in India with respect to approval of the scheme of amalgamation in companies act.? 07
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Q.4 (a) Define Due Diligence and describe the types and challenges faced in India. 07
(b) Discuss the reasons for failure of Mergers 07
OR
Q.4 (a) Explain Methods of Payment Consideration in Deal Structuring of M&As. 07
(b) Describe various anti-takeover strategies used by Indian companies to protect themselves from undesirable takeover. 07
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Q.5 Eagle Ltd reported a profit of 77 lakhs Rs after 30% tax for the financial year 2017-18. An analysis of the accounts revealed that the income included extraordinary items of 5 lakhs Rs and an extraordinary loss of Rs 10 lakhs. The existing operations, except for the extraordinary items, are expected to continue in the future. In addition, the results of the launch of new product are expected to be as follows: 14
Particulars Rs in Lakhs
Sales 70
Material Cost 20
Labour Cost 12
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Fixed Cost 10
You are required to:
- Calculate the value of the business, given that the capitalization rate is 14%
- Determine the market price per equity share, with Eagle Ltd’s share being comprised of 1,00,000, 13% preference shares of Rs 100 each and 50,00,000 equity shares of Rs 10 each and the P/E ratio being 10 times
OR
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MK Ltd is considering merger with NN Ltd. The following information is available:
| Company | Earnings after Tax (Rs) | No of Equity Share | Market Value Per Share (Rs) |
|---|---|---|---|
| MK Ltd | 60,00,000 | 12,00,000 | 200 |
| NN Ltd | 18,00,000 | 3,00,000 | 160 |
Exchange of equity shares for acquisition is based on current market value as above. There is no synergy advantage available.
- Find the earning per share for the company MK Ltd after merger, and
- Find the exchange ratio so that shareholders of NN Ltd would not be at a loss.
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