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Question:
1. When should stockholders doubt their own company’s support of a friendly acquisition?
2. What is your assessment of the stipulation placed on the acquisition by the Australian
government?
3. Which of the various valuation techniques do you find the most and least useful?
4. Do you think the offer is a good one? Should Quillan take it?
Answer:
1. When should stockholders doubt their own company’s support of a friendly acquisition?
The paper mentioned there was only four people holding more than 56.6 % of the Felix’s
shares, for this reason each of them could have a different valuation of the company,
reason why the debate could be in place. The first report the company made when
announced “indicative offer of AUD 20 per share" by Yanzhou was not what they were
expecting and there was the beginning of the debate. Much of the price offer was
depending on the coal prices and what the calculation of the value of the company result
by the negotiations parties. The problem was the way the calculations were made, DCF
cash flow was used for its calculations. The decreasing offers made was a clear sign the
negotiations were ending in a lower price for acquisition and probably not the fear price
for the companys owners.
Whit this sentence the company would understand the situation they were facing; Yanzhou
is the latest in a long line of Chinese suitors to consider buying Australian mining assets—
not all of which have been successful. This month, Chinalco’s
$19.5bn tie-up with Rio Tinto collapsed. However, Oz Minerals shareholders recently
accepted an offer from Minmetals to purchase the company’s mining assets after the
Chinese group raised its offer in a pre-emptive move to head off opposition. Felix
indicated on Wednesday that its own discussions with interested parties regarding a
takeover deal were ongoing.
—“Linc Energy ends talks with Yanzhou over sale,"
Financial Times, June 24, 2009.
2. What is your assessment of the stipulation placed on the acquisition by the Australian
government?
In order for the government to approve the negotiation, the following conditions were
putted in place
All Felix’s employees and their managers will keep their jobs and will continue in the
company, also a Yancoal Australia, which will be a mine operating company, located in
Australia under the Australian laws that will governate the company and with the
headquartes in Australia should be opened and start working.
This company, Yancoal would be managed in the mayority by australian managers as well
