Discuss how synergies and profit enhancements differ

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Reference no: EM133331676

Questions:

1. Anheuser-Busch rejected InBev's initial bid by stating that "Many of the suggested synergies seem not to be synergies at all, but are instead profit enhancements". In this context, discuss how "synergies" and "profit enhancements" differ from each other ?

2. ) Differentiate between various types of post-merger integration (PMI) strategies- Preservation, Transformation, Absorption. Cite one example of M&A deal where each of these strategies was followed .

3. In the following circumstances, what would you ideally recommend- Alliance or acquisition?

Potential acquirer has low absorptive capacity but there is high persistence of financial synergies (Alliance or acquisition)
There is low requirement for transaction specific investments (Alliance or acquisition

4. Siebel Incorporated, a nonpublicly traded company. Publicly traded Rand Technology, a direct competitor of Siebel's, was sold recently at a purchase price of 11 times its 2009 after-tax earnings, which included a 20% premium over its current market price. Aware of the premium paid for the purchase of Rand, Siebel's equity owners would like to determine what it might be worth if they were to attempt to sell the firm in the near future. They chose to value the firm using comparable-recent-transactions methods. What is the value?

Reference no: EM133331676

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