Based on a deal you can select from a list of deals provided in the attached excel file, which has been announced in 2011 by a U.S. listed corporation to acquire another U.S. listed target, the deal selected is Express Scripts Inc & Medco Health Solutions Inc, provide an analysis and discussion on the following 2 topics. The 2topics are:
- a) Background and motives: Provide background information for both merging firms and discuss the main motives of your deal. Evidence from the relevant literature is essential to support your argument(s). [50%]
- b) You are then required to link characteristics of your deal to evidence from prior studies on known factors that influence the likelihood of M&A success. How could these factors affect the structure and payoff of your deal? What payment method would you recommend to finance your deal and why (not necessarily the one actually used)? [50%]
1500 words +-/10% to be splitted roughly equal across the two topics , 25 references in Havard formatting with links and also the access date,
Please refer to the topic 3 lecture slide as attached for the key points for the part a), also here are the key points for the part a which you must cover during your writing.
Clearly state the Deal Number, the Announcement Date, the Name of the Acquirer, and the Name of the Target of your deal.
Relevant sources need to be cited clearly.
Please provide diagrams and stats where necessary
The deal would be Express Scripts Inc & Medco Health Solutions Inc,
This is about the further information
US – Express Scripts Inc (Express) merged with Medco Health Solutions Inc (Medco), a Franklin Lakes-based wholesaler and retailer of pharmaceuticals, in a stock swap transaction valued at USD 29.37 bil. Express offered USD 28.8 in cash per share and 0.81 common shares per Medco share. Based on Express’ closing stock price of USD 52.54 on 20 July 2011, the last full trading day prior to the announcement, each Medco share was valued at USD 71.357. On completion, the new company was named Express Scripts Holding Co (Express Scripts), and Express and Medco owned 59% and 41% of Express Scripts, respectively.
Part a)
Motives for the MA
- 1+1 is less than the 2+ episolon
- Operational or financial synergy
- Economies of scale, economies of scope, and economies of learning with three different types and draw the diagram for each of the type
- Economics perspective is to reduce the cost, we have the financial perspective, managerial perspectives: about the manager’s team, and how a good management team would benefit the company as the overall, strategic perspective: technological changes, diversiifiesd and focused deals, organizational perspective: market concentralization, transaction cost and also diversification
- Types of the merger is this a vertical or horizontal, and also speak about if we would have an increase in the market power and about the synergies
- Strategic motives of the MA, for example the technologies, market valuation, product development and differentiation, cost leadership and market segmentation
- Organization perspective: decision making process and how this may improve the
organization
Part b)
Please list out the characteristics of the deal, when it is about the previous studies, it would be about the studies in the previous academic articles, list out the known factors that influence the likelihood of M&A success (academic articles for the researching for this part), however, there are some suggestions for this part but please do not just use my ideas but rather do the academic article researching as well,
In conclusion, the success of an M&A deal depends on a complex interplay of factors, including strategic fit, cultural fit, due diligence, management capability, financial considerations, market conditions, timing, communication, stakeholder management, and integration planning. Companies should carefully consider these factors before embarking on an M&A transaction to increase the likelihood of success.
Also, we would also need to know how the factors would affect the structure and the payoff of the deal, whether it would affect the deal positively or negatively,
For the payment we would recommend to finance the deal, please explain three types of the finance method,
If we work well for this question we will work well for the next questions and we will work for months!