Australian School of Business Australian Graduate School of Management MNGT5522 Special Topic - Financial Strategy for Mergers & Acquisitions Course Outline Session 4, 2014 Part A: Course-Specific Information Please consult Part B for key information on AGSM & Universities policies (including those on plagiarism and special consideration), student responsibilities and student support services.
Table of Contents PART A: COURSE-SPECIFIC INFORMATION 2 1 STAFF CONTACT DETAILS 2 2 COURSE DETAILS 2 2.1 Teaching Times and Locations 2 2.2 Units of Credit 2 2.3 Summary of Course 2 2.4 Course Aims and Relationship to Other Courses 2 2.5 Student Learning Outcomes 3 3 LEARNING AND TEACHING ACTIVITIES 3 3.1 Approach to Learning and Teaching in the Course 3 4 ASSESSMENT 4 4.1 Formal Requirements 4 4.2 Assessment Details 4 4.3 Late Submission 5 5 COURSE RESOURCES 5 6 COURSE EVALUATION AND DEVELOPMENT 5 7 COURSE SCHEDULE 6
PART A: COURSE-SPECIFIC INFORMATION 1 STAFF CONTACT DETAILS Instructor: Professor Mark Stewart Location: Australian Graduate School of Management E-mail: mark.stewart@agsm.edu.au Consultation: By appointment 2 COURSE DETAILS 2.1 Teaching Times and Locations Updated information about class times and locations can be found on the AGSM website and by logging in to the Google Calendar. Note this course is taught in intensive mode only. 2.2 Units of Credit The course is worth 6 units of credit. 2.3 Summary of Course The objective of this course is to introduce students to Mergers and Acquisitions (M&A) and the requisite knowledge for the development and execution of corporate transactions particularly within equity capital markets. Typical transactions include Takeovers (and Schemes of Arrangement), Acquisitions, Divestments, Initial Public Offerings and Secondary Raisings. Each of these types of transactions will be addressed within the course. Students will utilise common corporate finance tools and knowledge as applied within the context of considering, developing and executing M&A transactions. Participants will apply insights and skills taken from previous courses in finance. The course includes negotiation within the context of M&A. Case studies are used extensively throughout the course including the use of current or recent transactions involving ASX listed companies. The course is a mixture of lectures, class discussions, case studies and group exercises all with an emphasis on the practical applications of corporate finance skills and knowledge within the context of M&A. 2.4 Course Aims and Relationship to Other Courses Students who successfully complete MNGT5522 Mergers and Acquisitions will have developed an understanding of how M&A is undertaken in equity capital markets. The course is delivered as a general introduction to M&A. The course provides a platform for extending knowledge obtained from finance and strategy courses for those who intend to pursue careers as corporate finance managers, portfolio managers, commercial bankers, investment bankers or management consultants. This course is complementary to the AGSM MBA electives, including Corporate Finance, Corporate Strategy and Financial Statement Analysis. MNGT5522 Special Topic - Financial Strategy for Mergers & Acquisitions 2
2.5 Student Learning Outcomes At the successful completion of this course a student should be: 1. Familiar with typical M&A transactions undertaken in equity capital markets; 2. Familiar with the regulatory environment and its impact on the planning and execution of M&A transactions; 3. Familiar with the operation of equity capital markets and the execution of Initial Public Offerings and Secondary Raisings as special forms of M&A transactions; 4. Capable of undertaking financial analysis for corporate valuation purposes within the context of acquiring or divesting assets and businesses; 5. Capable of appraising media reports of M&A transactions with a view to assessing strategy and tactics; 6. Capable of undertaking complex negotiations within the context of executing M&A transactions; and, 7. Familiar with key stakeholders involved in M&A transactions and how to develop strategies within the relevant regulatory environment that best address their interests. MBA Program Learning Goals This course contributes to the development of the MBA Program Learning Goals, which are the qualities, skills and understandings we want you to have by the completion of your degree, as indicated below: Learning MBA Program Learning Goals Outcomes All 1. An in-depth engagement with the relevant disciplinary knowledge in its interdisciplinary context 3, 4, 5 2. Team based skills 7, 8 3. Critical and analytical thinking 3, 4, 5 4. Decision-making and problem-solving 3 LEARNING AND TEACHING ACTIVITIES 3.1 Approach to Learning and Teaching in the Course This course aims to engage students, to encourage them to practise the methods of analysis outlined in the teaching process that is part of the course. While class participation is not graded, it is expected that all members of the class will be part of the on-going discussion of content, especially after the foundation ideas are laid and the superstructure of examples and concepts is being built up. It is essential that before attending class students undertake the Pre Reading as specified in the Course Schedule. The course uses a combination of lectures and class discussions based on specific exercises and cases. The lectures will convey the required methods and principles. However, the formulation of inputs and interpretation of outputs will require students to apply insights from other classes and/or experience, with an aim to offer a reasoned opinion on the topic under discussion. Students will need to think about and share with other course participants their views on companies broader goals, resources and strategic challenges and how these translate into an estimate of the scope for value MNGT5522 Special Topic - Financial Strategy for Mergers & Acquisitions 3
creation and how to develop and implement effective strategies for the execution of M&A transactions. The course is taught in intensive mode comprising 12 units of approximately three hours each. The scheduling of units is as set out in the course timetable. Students are required to attend all 12 units. 4 ASSESSMENT 4.1 Formal Requirements In order to pass this course, you must: achieve an aggregate mark of at least 50%; and make a satisfactory submission for each assessment element. 4.2 Assessment Details Group Project 35% Centred on the appraisal and proposed acquisition of an ASX listed company Client company (the Buyer) as nominated by the Group (subject to approval by the Instructor) Short list of three potential Target companies (subject to approval by the Instructor) Detailed appraisal of Preferred Target company and proposed transaction Including a brief comparison against the other two Target companies, an appraisal of strategic rationale for the acquisition, an appraisal of scope for value creation and the development of an M&A strategy for the execution of the proposed transaction The project requires the preparation of a report in a form consistent with a submission to the Board of the Client company the Executive Summary of the report will be in the form of a Powerpoint presentation with a maximum of 10 slides (note: Groups are NOT required to make the presentation) the supporting Report length maximum of 5,000 words The Groups are self selected and will comprise approximately four students. All students in a given Group will receive the same mark Case Study 35% An M&A case (HBS or similar) Case and questions will be provided in class Individual submission Maximum length 3,500 words Journal 30% Tracking of a topical corporate transaction Three journal entries each comprising the source article of interest with commentary by the student (maximum 500 words of commentary) Individual submission MNGT5522 Special Topic - Financial Strategy for Mergers & Acquisitions 4
4.3 Late Submission AGSM MBA Programs applies a daily penalty of 5% to late assignments. This policy was reviewed in October 2009 in light of the fact that certain schools within the Australian School of Business apply a 10% penalty. The decision of AGSM MBA Programs following this review was that current 5% penalty is appropriate to all of our programs and will remain unchanged. Refer to policy at: http://www.asb.unsw.edu.au/currentstudents/agsmmba/academicinformation/assessm entsandexaminations/pages/default.aspx Quality Assurance The ASB is actively monitoring student learning and quality of the student experience in all its programs. A random selection of completed assessment tasks may be used for quality assurance, such as to determine the extent to which program learning goals are being achieved. The information is required for accreditation purposes, and aggregated findings will be used to inform changes aimed at improving the quality of ASB programs. All material used for such processes will be treated as confidential and will not be related to course grades. 5 COURSE RESOURCES There is no prescribed text for this course. Students are expected to have access to a standard Corporate Finance text (such as Brealey, Myers, Partington and Robinson, Principles of Corporate Finance, Australian Edition (McGraw Hill). More specialised texts may be useful for reference (inspection copies will be available from the Instructor): Damodaran, Investment Valuation: Tools and Techniques for Determining the Value of Any Asset, University Edition (Wiley) Koller, Goedhart and Wessels, Valuation: Measuring and Managing the Value of Companies, 5th edition 2010 (Wiley) Bruner, Applied Mergers and Acquisitions, University Edition (Wiley) Case materials will be provided during the course. 6 COURSE EVALUATION AND DEVELOPMENT Mid- and end-of-session feedback is sought from students about the courses offered in the AGSM MBA Program, and continual improvements are made based on this feedback. The mid-session feedback is collected in weeks 3 or 4, and communicated to students in the class following its collection. Significant changes to courses and programs within the Program based on end-of-session feedback are communicated to subsequent cohorts of students. MNGT5522 Special Topic - Financial Strategy for Mergers & Acquisitions 5
7 COURSE SCHEDULE The course is taught in intensive mode comprising 12 units of approximately three hours each. Each unit is divided into two parts (A and B). It is envisaged that each unit will include in the news involving discussion of topical M&A transactions and issues as reported in the local press. Students are expected to monitor the Australian Financial Review and the Australian Stock Exchange for developments in the transactions of interest. The Course Schedule may be revised in response to items in the news. Note that Pre Reading of some materials is required (as specified) and is compulsory. Students are expected to have read the materials and to be familiar with their content. No appraisal or analysis is required. In class, specific aspects of the case will be highlighted and addressed. Unit Topic Pre Reading 1A Introduction and course overview Contextualisation of M&A and Equity Capital Markets 1B Review of current transactions to be monitored during the course Case: Billabong Discussion (Value Creation, Private Equity, Capital Requirements) 2A Review of Corporate Finance basics 2B Case: Wesfarmers 1 Discussion (Value Creation, Regulatory Environment) 3A Case: Midland Energy Exercise (Valuation issues) 3B Case: Wesfarmers 2 Discussion (Divestments, merger with Coles) Midland Energy case 4A Introduction to Principled Negotiation 4B Case: Knight Engines (or alternative tba) Exercise (Negotiation) 5A 5B 6A 6B 7A 7B Overview of Equity Capital Markets Overview of Debt Capital Markets Case: Cartwright Exercise (Capital requirements and sources of capital) Case: Doray Minerals Discussion (IPO, secondary raisings and project finance) Case: Slater & Gordon Discussion (IPO) Case: HBS 1 (Valuation within context of acquisition) Introduction Case: HBS 1 continued Exercise Cartwright case Doray presentation Slater & Gordon case MNGT5522 Special Topic - Financial Strategy for Mergers & Acquisitions 6
8A 8B 9A 9B Case: Syrah Resources Discussion (Secondary raisings, derivatives) Private Equity Overview Case: HBS 2 (M&A execution) Simulation Case: HBS 2 continued Simulation Case: HBS 2 continued Simulation Syrah Resources presentation 10A Case: SAB Miller and Fosters Discussion (Takeovers) Fosters presentation 10B Not Allocated 11A 11B 12A 12B Exercise: SAB Miller and Fosters Synergistic benefits Case: HBS 3 (M&A acquisition and negotiation) Exercise Case: HBS 3 continued Exercise Course Review Assessment Review Q&A MNGT5522 Special Topic - Financial Strategy for Mergers & Acquisitions 7