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Assignment on Corporate Finance - Essay Example

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This report attempt to minutely establish the appropriate theoretical bases of corporate finance with practicable and life example on proposed take over of UCB. We carried a research in the following aspect: Motive, Method of Valuation, Financing the project and finally we give adequate recommendation.
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Assignment on Corporate Finance
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Download file to see previous pages A merger can resemble a takeover but result in a new company name or combining the names of the original companies. (http://en.wikipedia.org)
Shleifer and vishny (2003) proposed a market timing model of acquisition. They assumed that acquirers are overvalued, and the motive for acquisition is not to gain synergies, but to reserve some of their temporary overvaluation for long-run shareholder. Specifically, by acquiring less-overvalued target with overpriced stock (or less interestingly, undervalued target with cash) overvalued acquirers can cushion the fall for their shareholders by leaving them with more hard assets per share or, if the deals value proposition.
This refers to the fact that the combined company can often reduce duplicate departments or operations, lowering the cost of the company relative to theoretically the same revenue stream thus, increasing profit.
For example, a bank buying a stock broker could then sell its banking products to the stock's customers while the broker can sign up the banks customers for brokerage account. Or a manufacturer can acquire and sell complimentary products.
This is the sign to smoothen the earning result of a company, which over the long-term smoothes a stock price of a company, giving conservative investors more confidence in investing in the company. However, this does not always deliver value to shareholders (http://en.wikipedia.org)
From datamonitor analyses, UCB has an inorganic expansion into lucrative AIID and oncology market. The acquisition of the Biotechnology Company, Celltech offered UCB technology platforms and experience for the development of biological drugs.
And the new regulations allows our company to create motive for us to merge and acquire, which is an opportunity for us to have a strong R & D pipeline and new expertise in the pharmaceutical sectors. So all of this would be achieved rapidly if acquisition decision is taken.
Asset acquisition
UCB is a multinational company, operating in more than one hundred and forty countries, also it is one of the largest pharmaceutical and chemical ...Download file to see next pagesRead More
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