Prepare an executive report for presentation

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Reference no: EM132662809

CLAW3206 Regulation of Mergers and Acquisitions - The University of Sydney

REGULATION OF MERGERS & ACQUISITIONS

Scenario:

A partner in the Sydney-based office of Takeovers Unlimited, a top tier M&A practice operating in Sydney, Melbourne and Brisbane, has handed you, an account executive in the practice, the file on a proposed takeover by a large client, Harrison Farm Markets Limited, of Country Fresh Produce Limited. Your mission, should you choose to accept (which you will if you wish to keep your job and pass this Unit), is detailed below and involves the preparation of an Executive Report regarding the bid proposal for presentation to the client. Both companies are listed on the ASX and have been engaged in discussions regarding the proposal.

The partner has prepared for you a schedule of information for your consideration on which to base the Executive Report.

Schedule of Information

Harrison Farm Markets Limited ("HFM"):

• already owns 9% of the issued voting shares in CFP which it acquired by purchasing those shares on market in 3% increments over the last 18 months at $3.65 per share
• is a corporation registered in Australia
• is involved in the business of the provision of non-perishable and fresh groceries for both wholesale and retail sectors in Queensland, NSW, ACT and Victoria
• is proposing to offer CFP shareholders cash and scrip for their CFP securities
• is seeking to acquire total control of CFP and will make the bid conditional to that effect
• desires the co-operation of CFP and the exclusion of competing bidders but wishes to retain the right to bid against any competing proposals
• has been advised by Pinnacle Investments Ltd and Vital Superannuation Ltd that they will accept the offer once it has opened and will sell all their shares into the bid (with current shareholdings of 11% and 9% in CFP respectively)
• desires preservation for HFM's benefit of CFP's plant & equipment and intellectual property
• seeks to be compensated 2% of the total bid value by CFP if the bid fails due to any default by CFP
• desires to be able to withdraw from the bid in the event that it considers CFP to be an undesirable acquisition

Country Fresh Produce Limited ("CFP"):

• is a corporation registered in Australia
• is involved in the same industry and in the same locations as HFM
• is similar in membership and entity size to HFM
• has a 42% shareholding in Mobile Pantry Ltd (online groceries supply & delivery company)
• upon a control transaction resulting in a change of control, CFP's constitution provides that key personnel will become entitled to a cash payout of 10 times the amount of their salary at the time and CFP will initiate a rights issue exclusive of any bidder
• seeks to be compensated 2% of the total bid value if the bid fails due to HFM
• certain shareholders may hold approximately 12% of the issued voting shares in the company
• last week, CFP received written advice of a takeover from HFM

Mission:

You are to prepare an Executive Report for presentation by the M&A partner to HFM on its proposed takeover of CFP (your next promotion and graduation hang on this).

As the takeover will involve significant issues both for HFM and for CFP, and given that HFM should anticipate the issues that CFP will face, the Executive Report must identify and advise on those issues, both regulatory and otherwise (eg conduct and strategy), that will be of importance to each party in relation to the execution of the bid and the application of relevant provisions of the Corporations Act 2001 (Cth) and Takeovers Law.

Attachment:- Regulation of Mergers and Acquisitions.rar

Reference no: EM132662809

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