Questions from text book Mergers, Acquistions and Other Restructuring Activities
ID: 441974 • Letter: Q
Question
Questions from text book
Mergers, Acquistions and Other Restructuring Activities, 7th Edition
ISBN-13: 9780123854872
Author(s): DePamphilis, Donald
Case Study 3.1 Teva Acquires Cephalon in a Hostile Takeover
Discussion Questions:
1: What were the motivations for Valeant and Teva to be interested in acquiring Cephalon?
2: Identify the takeover tactics employed by Valeant and Teva. Explain why each was used.
3: What alternative strategies could Valeant and Teva have pursued?
4: Identify the takeover defenses employed by Cephalon. Explain why each was used.
5: What does the reaction of investors tell you about how they valued the combination of either Valeant or Teva with Cephalon?
Bespecific
6: Why do the shares of acquiring companies tend to perform better when cash is used to make the acquisition rather than equity?
Explanation / Answer
1) Valeant and Teva both were motivated for acquiring full ownership from Cephalon.
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2)Teva decided to give high prices for take over the possession.
Valeant having cost reducing and improvement earnings performance by paring back its own internal R &D activities, after acquisitions Valeant has ready to cut their own R&D.
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3)Valeant used another strategy by proposing with hostile offer that is shareholders should replaced the cephalon’s board with its own chosen directors, new boards have to change shareholders rights plan.
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6)Cash is comes under current Assets and it is easily valued once valued cannot changed. But equity can't like cash, share price will be increase or decrease. So it is better to safe guarding their side acquiring companies.
Cash is easily settle down to concerned parties if it is equity, lot of corporate procedures is there, first of all the share holder meeting have to be undergone.
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