Mergers and Acquisitions

Stanmore Ltd is a stock-exchange listed company that operates in the agrichemicals industry. Its market capitalisation is R19,000-million and it has a debt to equity ratio of 20:80. Institutional shareholders hold majority shares. Over the years, the company has maintained a sizeable market share. It has a reputation for products that are less harmful to the environment. However, its growth and innovation have slowed in the past three years, resulting in it introducing fewer new products to the market than usual. At its most recent board meeting, its slow growth and diminishing product innovation were discussed. A number of strategic opinions were debated. Those that gained traction came from three directors: • Ms Barbs, who felt that Stanmore Ltd should pursue acquisitions in different sectors. While the company had experienced organic growth, she stated that focusing on the agrichemicals sector alone was too risky. Investing in other sectors would mitigate this risk. • Mr Guv disagreed, arguing that Stanmore Ltd should increase shareholder value by focusing on current core business and acquiring other medium-sized companies to accrue synergy benefits in the agrichemical sector. • Mr Gilbert agreed with Mr Guv, adding that the medium-sized agrichemical companies that Stanmore Ltd targeted should be th​‌‍‍‍‌‍‍‌‍‌‌‍‍‍‌‍‌‌‌‍​ose focusing on research and development, and have patents that could be harnessed. In addition, Stanmore Ltd should use real options methodology to appraise potential investments, rather than traditional net present value. Asked by the chairperson to explain this, Mr Guv said real options took into account the fact that there was a certain amount of flexibility in most investments, such as whether to undertake the investment immediately or to delay the decision; to pursue follow-on opportunities; and to cancel an investment opportunity after it had been undertaken. This added value to the investment being considered, he said. 1. 2.1 Compare and contrast the justifications behind Ms Barbs’ and Mr Guv’s opinions and discuss the types of synergy benefits that might arise from the acquisition strategy suggested by Mr Guv. (15 marks) 2. 2.2 Outline how using real options methodology in conjunction with net present value could help establish a more accurate estimate of the potential value of companies, as suggested by Mr Gilbert. (10 marks) 3. 2.3 Explain how the mandatory bid rule and the principle of equal treatment protect shareholders in the event of their company facing a takeover bid. (6 marks) 4. 2.4 Discuss the effectiveness of poison pills and disposal of crown jewels as defensive tactics against hostile takeover bids​‌‍‍‍‌‍‍‌‍‌‌‍‍‍‌‍‌‌‌‍​. (9 marks)

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its poignant, powerful democratizing lyrics. It begins by informing the president that “your people are dying”, “eating from garbage”, “We are living like dogs”, then El Général continues to describe the myriad indignities and violence, corruption and oppression suffered by ordinary Tunisians. The heightened speech of the narration comes across as rebellious and bold as he then goes on to explain: “Mr. President, you told me to speak without fear, I spoke here, but I knew that my end would be palms (i.e., slaps and beatings), I see so much injustice. That’s why I chose to speak out, even though many people told me that my end will be execution. But how long (must) the Tunisian live in illusions?”. El General adopted an activist agenda and spoke loudly in the name of the poor and underprivileged, despite the repercussions. He clearly knew of the repercussions behind his confrontation yet decided to communicate the narrative of subjugation and suppression which his audience could understand and relate to. He layed Tunisia’s claim to the right to revolution by showing Ben Ali’s failure to look after the citizens of his country.

He then later released his song “Tounes Bledna” (“Tunisia is our country”) on YouTube and in the chorus he furiously rhymes: “Tunisia is our country, with politics or with blood!” “Tunisia is our country and her men will never surrender!” “Tunisia is our country, the whole people hand-in-hand!” and “Tunisia is our country and today we must find the solution!”. He uses music as a call for economic opportunities, a clean government and the rule of law for the citizens of Tunisia. El General pro-democracy political values and identity filtered into his music as his lyrics reflect the social and political grievances the citizens of Tunisia faced and became the personification of protest. His songs resonated with every Tunisian person that was exposed to the widespread government corruption and ineptitude, which were all of Ben Ali’s neoliberal restructuring of the country. In this instance, the repetition of “Tunisia is our country” instantly fixes all of the people with that nationality, instantly creating a collective binding reinforces feelings of national kinship.

Fela Kuta, Africa’s greatest political artist understood that music is a ‘weapon of the future’ in the struggle against violent, corrupt and repressive regimes. Music serves as a vehicle and creates space for subcultures to become countercultures; marginalised groups tend to be drawn together by common cultural tastes in arts such as music and performances that gradually articulate a powerful oppositional political vision and identity that challenges authoritarian state power. The music of El General powered by the self-immolation of Mohammed Bouazizi, a vegetable vendor, the lone breadwinner of his family of seven, ignited nationwide protests where people took their political views and identities out onto the streets to fight for what they believed in, which was the removal of Ben Ali and his regime.

The mobilising capacity and political weight of music can be determined by the r

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