ALBA EXECUTIVE DEVELOPMENT PROGRAMS
MERGERS & ACQUISITIONS
conducted by
Theo Vermaelen
The Schroders Chaired Professor in International Finance and Asset Management
Professor of Finance, INSEAD, France
June 5-6, 2001
(09:00 – 17:00)
HOTEL GRANDE BRETAGNE
Constitution Square, 105 63 Athens, tel. 3330000
MERGERS & ACQUISITIONS
Description
The course will start with an overview of valuation methods, but with special emphasis on
discounted cash flow. Participants will be told how to forecast cash flows during a forecast
horizon, estimate the discount rate (WACC) and how to calculate residual values after the
forecast horizon.
Next, we will discuss strategic and tactical issues in mergers and acquisitions, in
particular, in particular, how to chose the method of financing when making an acquisition,
how to deal with takeover resistance, how to convince shareholders to tender their stock.
These principles will then by applied to the Cooper case.
The second day will start with leveraged buyouts, transactions where a company creates
shareholder value by increasing financial leverage and increasing managerial ownership.
The course will show how, by structuring the deals properly, costs of financial distress arising
from the high leverage can be controlled. Empirical evidence on the factors that determine
the success and failure of buyouts will be discussed and illustrated with the Congoleum case,
In many ways share repurchases provide similar benefits to leveraged buyouts, but, unlike
buyouts, share repurchase is an instrument of value creation that can be used by a wide
range of companies. Moreover, it will be illustrated how companies can use buybacks to take
advantage of an undervalued share price. Moreover, it will be shown that the market typically
underreacts to buyback announcements. Hence, share repurchase announcements can also
be used by portfolio managers (such as Prof. Vermaelen, who manages the KBC Equity
Buyback fund) to systematically beat the market.
Objective
Participant Profile
Seminar Outline
To understand how a company can create shareholder value through various forms of
corporate and financial restructuring.
Corporate finance professionals, investment bankers and others who advise corporate clients
on financial policy and value based strategy.
Participants should be familiar with basic finance theory, such as discounted cash flow,
although at the beginning of the course we provide a brief overview of valuation methods.
Day One
Day Two
Lecture: Valuation issues in M&A
Overview of discounted cash flow
valuation: forecasting cash flows,
estimating residual value, calculating
the weighted average cost of capital.
Lecture: leveraged buyouts
Leveraged buyouts are transactions designed to
increase leverage and managerial ownerships.
Benefits and costs of buyouts will be discussed. The
importance of optimal deal structuring will be
illustrated by examples of good and failed buyouts.
Case: Cooper Industries
Cooper has to decide how much to pay
for
Nicholson
file
company.
Participants have to value Nicholson,
including the expected synergies. They
also have to value a competing bid by
VLN.
Case discussion: Cooper Industries
Lecture: Strategic issues in M&A
Discussion: (1) acquisition financing, (2)
takeover defenses, (3) tactics to
overcome free-rider problems.
Illustrated by means of the Cooper
case.
Case: Congoleum
Participants have to estimate the benefits to
shareholders from doing the buyout: tax savings,
reduction in agency costs, wealth transfers from
creditors as well as the possibility to buy an
undervalued company. The deal will be considered
both from the company's point of view, as well as
from the point of view of the institutional investors
who are helping to finance the deal.
Lecture: Share repurchases
Overview of share repurchase methods and
consequences for shareholder value. Moreover, it
will be shown that investors can earn abnormal
returns from buying value stocks after buyback
announcements.
MERGERS & ACQUISITIONS
Admittance Procedure
Please complete, in full, and submit the enclosed application form. You can make a
provisional reservation prior to this and we will hold a place for you for 2 weeks.
Please note, however, your place is not guaranteed until receipt of your application
form.
You should apply as early as possible due to limited class size. Priority will be given
to early applications.
The invoice must be paid in full before you join the Seminar.
Please submit your application (c/o Helena Lagia):
Fax: (301) 8964737
E-mail: exed@alba.edu.gr
www.alba.edu.gr/executive/oseminars
Payment Terms
If you register:
Until May 11, 2001
After May 25, 2001
(early application)
Full Fee:
470.000 Drs
ALBA Corporate Members:
380.000 Drs
ALBA Alumni:
340.000 Drs
€1380
€1116
€998
(normal)
560.000 Drs
450.000 Drs
400.000 Drs
€1644
€1321
€1174
A sum of 100.000 Drs, €294 should be deposited by:
May 11, 2001
May 25, 2001
Participation fee includes tuition, educational material and light meals.
•
Deposits should be made to ALBA’s Bank Account number 014-101-00-2002-019187 at the
ALPHA BANK. Deposits are not refundable
•
Volume discounts (not valid for ALBA Alumni):
- For more than 2 participants, 10% discount per participant
- For more than 4 participants, 20% discount per participant
APPLICATION DEADLINE DATE: MAY 25, 2001
Cancellation Policy
•
No cancellation fee will be retained, if we receive your cancellation in writing, 5
working days before the Seminar
•
50% of the normal fee will be retained if you cancel less than 4 working days
before the Seminar
•
70% of the normal fee will be retained if you do not attend the Seminar and
•
Deposits are not refundable
MERGERS & ACQUISITIONS
Theo Vermaelen
The Schroders Chaired Professor in International Finance and Asset Management,
Professor of Finance, INSEAD, France
Theo Vermaelen is the Schroders Chaired Professor of International Finance and Asset Management
at INSEAD and Extraordinary Professor at Maastricht University, where he teaches in undergraduate,
MBA, PhD and Executive programmes. He is a graduate from the Department of Applied Economics
at the Catholic University of Leuven (Commercial Engineer) and obtained an MBA and PhD in Finance
from the Graduate School of Business, University of Chicago.
Dr Vermaelen has taught at the University of British Columbia, the Catholic University of Leuven, The
London Business School, UCLA and the University of Chicago. He has published several articles on
corporate finance and investments in leading academic journals, including the Journal of Finance, the
Journal of Financial Economics and the Journal of Banking and Finance. He is co-editor of the Journal
of Empirical Finance and associate editor of Financial Management, the Journal of Corporate Finance,
the European Financial Review and advisory editor of Teaching and Case Abstracts. He is also a
consultant to various corporations and government agencies and Programme Director of the
Amsterdam Institute of Finance.
Professor Vermaelen is generally regarded as the world’s leading expert on share buybacks. Among
the most interesting findings of his research is the fact that the market seems to underreact to the
good news contained in share buyback announcements. Based on these results he started, in 1998, a
mutual fund, the KBC Equity Buyback Fund, which invests in depressed companies announcing share
buybacks.
Created in 1992 with funds supplied by the European Union and Greek corporations, ALBA is a not-for-profit Association
of 38 corporations, operating under the auspices of the Federation of Greek Industries (ΣΕΒ), the Hellenic Management
Association (ΕΕ∆Ε), and the Athens Chamber of Commerce and Industry (ΕΒΕΑ). Its mission is to provide a rigorous
postgraduate business education of the highest international academic standards, as well as to bring business
organizations in close contact with Greek and foreign specialists in all scientific disciplines pertaining to business.
ATHINAS AVE & AREOS 2A, 166 71 VOULIAGMENI, ATHENS - GREECE
TEL: (301) 8964531-8 FAX: (301) 8964737
www.alba.edu.gr
MERGERS & ACQUISITIONS
EXECUTIVE DEVELOPMENT APPLICATION FORM
General Information
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Company Information
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directly
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indirectly
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I hereby accept ALBA’s cancellation policy as described in the Seminar brochure
Please tick the box if applicable
ALBA Corporate Member
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Fax: (301) 8964737
………………………………………………………………………….……
E-mail: exed@alba.edu.gr
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www.alba.edu.gr/executive/oseminars
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