CHIMANBHAI PATEL INSTITUTE OF MANAGEMENT & RESEARCH

MBA SEMESTER- IV
Internal Evaluation Ea!ination" Ma# $%&$
Na!e o' (u)*e+t" Mer,er( & A+-ui(ition(
.ate" %$/%0/$%&1 2Ti!e" &%31% AM 4 &31% PM5
Total Mar6(" 7%
Instructions: All questions carry equal marks.
Q-1 Explain the following terms in brief:
a! "hat is corporate restructuring# Explain $arious forms of corporate
restructuring.
%&!
b! "hat are the $arious areas in which 'ue 'iligence is carrie' on# Explain each
in brief. (ighlight the common aspects examine' in )ue )iligence by the
acquirer team in corporate *estructuring.
%&!

Q-+
a! , -t' an' . -t' agree' to amalgamate their business by transferring their
/n'ertaking to a new company0 ,. -t'. 1n the 'ate of amalgamation0
balance sheets of the two companies were as un'er :
-iabilities , -t'. . -t'. Assets , -t'. . -t'.
Equity
2hare
3apital
*s. 1%
each!
40%%0%%% 50%%0%%% 6ixe'
Assets
708%0%%% +04%0%%%
*eser$es ------ 4%0%%% 9roperty +0%%0%%% 10%%0%%%
9 : - A;c 5%0%%% +%0%%% In$estments 4%0%%% +%0%%%
4<
)ebentures
+0%%0%%% 10%%0%%% )ebtors +04%0%%% 104%0%%%
=ortgage
-oan
4%0%%% ------ 9reliminary
Expenses
+%0%%% 8%0%%%
3re'itors +0+%0%%% 105%0%%%
1%0%%0%%% >0%%0%%% 1%0%%0%%% >0%%0%%%
9urchase consi'eration consiste' of the following:
)ischarge of 'ebentures of both companies by the issues of equi$alent amount
of >< 'ebentures in ,. -t'.
-iabilities of both companies will be taken o$er by the new company.
?he issue of equity shares of *s. 1% each in ,. -t'. at a premium of *s. + per
share.
6or the purpose of amalgamation0 the assets were $alue' at un'er:
Assets , -t'. . -t'.
@oo'will 10%%0%%% &40%%%
9roperty +0>%0%%% 107%0%%%
In$estments 410%%% +%0%%%
6ixe' Assets 701%0%%% +08%0%%%
)ebtors +0+40%%% 10540%%%
9repare the balance sheet of ,. -t'. after Amalgamation
%&!
b! Explain the pro$isions un'er $arious sections of the In'ian 3ompanies Act
which are rele$ant for =ergers : Acquisitions.
%&!
1*
Q-+ %&!
b! "hat are the tactics use' by a company as a 'efense against the threat of an
acquisition#
Q-5 17!
a! "hat are the moti$es behin' international acquisitions# "hat are the
'ifficulties face' by a company in cross-bor'er acquisition#
b! *am -t'. is trying to buy 2hyam -t'. which is a small pharma firm that
'e$elops pro'ucts that are license' to maAor pharmaceutical firms. ?he
'e$elopment costs are expecte' to generate a negati$e cash flow of *s. 1% lakh
'uring the first year of the forecast. -icensing fee is expecte' to generate
positi$e cash flows of *s. 40 1%0 14 an' +% lakh 'uring +-4 years respecti$ely.
)ue to the emergence of competiti$e pro'ucts0 cash flows are expecte' to
grow annually at the rate of 4< after fifth year fore$er. ?he 'iscount rate for
first fi$e years is estimate' to be 14< an' then 'rop to 8< beyon' fifth year.
3alculate the $alue of the firm.
1*
Q-5 17!
a! "rite a short note on Asset Base' Caluation an' Earnings Base' Caluation.
b! Base' on the comparable companies approach0 fin' out the $alue of ( -t'.0
which is a prospecti$e target0 from the following information:
9articulars 9 -t'. Q -t'. * -t'.
9rice ; 2ales 1.&> 1.>% 1.8+
9rice ; Book 1.D+ 1.&% +.%4
9rice ; Earnings +4 +8 5%
?he current sales of ( -t'. are *s. 1>+ crore0 Book $alue of equity is *s. 1+%
crore an' earnings are *s. +4 crore.

Q-7 17!
a! "hat are the a'$antages of strategic alliances# )ifferentiate between strategic
alliances : EC.
b! Brief 2EBIFs gui'elines for buyback of shares.
1*
Q-7 17!
a! "hat are 'i$estitures# "hy 'o companies go for 'i$estitures#
b! "hat are GE219sF# Explain in 'etail $arious types an' uses of E219s.
Q-4 17!
a! "rite a note on three recent acquisitions in In'ia.
b! )escribe the pro$ision relating to minimum offer price an' payment of
consi'eration un'er 2EBI ?akeo$er co'e.
1*
a! 2tate the essential characteristics of -B1 can'i'ate. Also explain =B1.
b! Explain 'ifferent types of mergers with suitable example.
HHHHHHHHHHHHHH