Possible M& As Questions – Part A ) 1

M&A questions – Part A 2  Critically assess whether the acquisition of Ultra-electronics would be strategically fit Rolls Royce plc.  What regulatory challenges may faced by Rolls Royce in acquiring Ultra- electronics.  Critically discuss the potential post-acquisitions challenges to be faced by Rolls Royce. II. Regulatory IssuesIII. Post M&A issues I. Strategic Fit 2

Strategic fit analysis Strategic fit: why important what type of strategy: domain extension, Domain Strengthening and/or domain exploration? Assessing the fit: Similar/complementary products; geographic market served; similar customer; distribution channels; technical know-how; strategic asset acquisition What type of capability transfer: resource sharing and/or functional skill transfer? What are the sources of value: Entry to new market; brand names? 33

Exam tips – Regulatory issues (8 to 10 marks)  Do you think OFT Competition commission will provide permission? (given that It’s a deal with more than £70millon)  If you are expecting delay, what are the implications for acquiring firm? (OFT CC can take up to six months to provide permission) What about the share price movements of target company during the time OFT considering the M&A deal?  Defence techniques - consider whether Other competitors can start bidding for the target?  City Takeover panel regulation – non compliance may lead to penalties! 4

Exam tips – Post M&A issues Key to higher marks: Identify – Justify – Recommend Identify the critical success factors? Justify the importance  The degree of integration - absorption vs Preservations vs Symbiosis  Organizational Cultural differences – management styles; reward systems, attitude toward risk, decision making proces s  Selecting the right team – including integration manager  Knowledge transfer – technical (R&D), know-how  Employee retention – identify and retain  Communications - with employees, shareholders and vendors Recommend how to overcome those challenges? Be specific 5

References and Text books Sudi Sudarsanam (2010) Creating value from mergers and acquisitions. 2 nd Edition – All in one M&A book Watson & Head (2013) – Corporate Finance, Principles and Practice, Pearson. Chapter 11 for M&A regulatory issues Ahammad, M. F. and Glaister, K. W. (2013) The pre-acquisition evaluation of target firms and cross border acquisition performance, International Business Review, Vol. 22(5), pp – For Strategic fit analysis Mohammad Faisal Ahammad and Keith Wilson Glaister (2011) Post- acquisition Management and Performance of Cross-Border Acquisitions, International Studies of Management and Organization, Volume 41, Number 3, pp – For Post-M&A issues Other peer-reviewed academic and practitioner based papers 6

Thank you for your attention! Any Question? 7