Merger And Acquisition

TACC613 Mergers and Acquisitions Autumn 2021
Individual Assignment Guidelines
Deal Rationale
[10 marks]
Due Date: Friday, May 7, 2021, by 6:00 PM via Turnitin on Moodle.
For this assignment, you should analyse the merger between A P Eagers (ASX: APE) and Automotive
Holding Group Ltd (ASX: AHG) in 2019.
You should analyse the deal based on the information available at the time of the deal announcement.
The assignment write-up should be about 1000 words (up to 2 pages long).
You can add two more page of appendix of tables and graphs
 You have to make your own graphs and tables — you should not copy graphs and tables from other
You should include a list of references: this will not count towards the page limit.
Your write-up should address the following points:
 Overview of acquirers’ (A P Eagers) industry and its business and discussion of acquirer’s
business plan/strategy and its merger strategy (about one page)
 The analysis should be based mainly on lecture 2 and include the following elements:
o Industry analysis: Porter’s five forces and industry trends and developments applied to the
 Given the page limit, only the most important/relevant factors should be highlighted.
 Discuss one or two of Porter’s five forces.
 Discuss one of two industry trends
o Company analysis: Analysis of the company’s financial performance
o Discuss how the current merger relate to the company’s business plan and strategy.
 Deal Rationale (about one page)
 Justify or criticise the deal concept and explain the logic (or lack thereof) of the deal.
o Using tools and concepts from lecture 1 (and the three slides on synergy in lecture 3), describe
the motivations and the rationale for the deal.
 What are the sources of synergy and value creation? Be specific and detailed.
 What other objectives/reasons are behind the deal?
 Are there bad reasons for the deal?
o Was the deal reasonably priced and correctly timed?
Autumn 2021 TACC613 Mergers and Acquisitions
 Do a comparable company valuation of the target (Automotive Holding Group) —
see Lecture 4, slides 39 & 40 for how to conduct this analysis.
o Try to link the deal rationale with the industry/company analyses above.
 How does the current deal fit with your analysis of acquirer’s business plan — i.e., is
this deal a good ‘strategic fit’ for the acquirer?
 Does the deal make sense in a long-term or ‘strategic’ sense?
 The bullet-points above are given as a guide to organise your write-up.
o You do not need to address all the bullet points, and you may want to use other
concepts/frameworks from lectures 1 & 2, including the annex slides, in your write-up.
 Please be aware that all factors are not equally important in all deals, so you should vary the emphases
on different points as appropriate.
o Try to think what is the strategic challenge facing the industry and the firm, and what are the
major reason(s) for this particular deal.
o Then organise your write-up so the analyses support your conclusions on these issues.
 Your write-up should be based on thorough research. You should use all of the following sources to
gather the necessary background information:
o Bidder and target’s annual reports, bidder’s statement and target’s statement (or scheme
booklet, for Scheme deals) — these are available from ASX:
o You should also consult other ASX announcements of the bidder and the target around the
proposal of the deal.
o Industry reports, e.g., IBIS World industry report
o News articles about the industry and mergers in the industry and about the bidder and the
target. You can use google search to find relevant articles.
Assessment Criteria:
 The following criteria will be used to assess the assignment:
1. Quality of your analysis and the soundness of your arguments and logic as evidenced by your ability
to analyse and discuss the factors driving the acquisition decision (the deal rationale).
2. Ability to apply the theories and concepts introduced in the lectures to analyse the deal rationale.
3. Clarity of writing and quality of presentation.
 Some additional guidelines:
o You should support your arguments and claims with evidence.
o Your analyses should build up to a conclusion, and should not be just a series of unconnected
observations and statements.
o You should not include information that is not relevant for your arguments and conclusions.
o The language of the report should be clear, concise, coherent and grammatically correct.