CHAPTER 10

MERGERS AND ACQUISITIONS

Rosita P. Chang, CFA

Honolulu, Hawaii, U.S.A.

Keith M. Moore, CFA

Greenlawn, New York, U.S.A.

LEARNING OUTCOMES

After completing this chapter, you will be able to do the following:

• Classify merger and acquisition (M&A) activities based on forms of integration and types of mergers.
• Explain common motivations behind M&A activity.
• Explain how earnings per share (EPS) bootstrapping works and calculate a company’s post-merger EPS.
• Explain the relationship among merger motivations and types of mergers based on industry life cycles.
• Contrast merger transaction characteristics by form of acquisition, method of payment, and attitude of target management.
• Distinguish among pre-offer and post-offer takeover defense mechanisms.