Referencing Styles : Harvard A. Deal Rationale [30 marks]A series of slides will justify the deal concept and explain the logic of the deal. These slides will address the following points:? Overview of Woolworths’ industry, business, its strategy and its merger strategy? Target company’s industry analysis using the factors (five forces and others) discussed in the lecture slides? Target company’s company analysis using the guideline in the lecture slides: this will involve both qualitative and quanti … View More A. Deal Rationale [30 marks] A series of slides will justify the deal concept and explain the logic of the deal. These slides will address the following points: ? Overview of Woolworths’ industry, business, its strategy and its merger strategy ? Target company’s industry analysis using the factors (five forces and others) discussed in the lecture slides ? Target company’s company analysis using the guideline in the lecture slides: this will involve both qualitative and quantitative analysis ? Comparison of the target company with peers (appendices) ? Target’s segment analysis (appendices) ? Target’s Management and Management quality ? Target company’s strategy analysis and its merger strategy analysis ? Deal Rationale o You need to bring together the analyses in the preceding points and other deal motivations to fully justify the choice of the target and the sources of synergy and value creation o This slide will include qualitative discussion of the sources of synergies and value creation and well as why the deal makes sense in a long-term or “strategic” sense B. Valuation [30 marks] A series of slides will value the target company by itself (stand-alone valuation), and separately value the potential synergies from the acquisition: ? DCF Assumptions: you should state the assumptions in one slide in the “presentation” section and explain these assumptions in another slide in the “appendices”. The assumptions will include your forecasts about revenue growth, profit margin etc. ? Stand-alone DCF analysis of the target (in appendices): follow the standard DCF method ? DCF sensitivity analysis and DCF scenario analysis ? Comparable valuation using comparable listed companies ? Comparable valuation using comparable precedent transactions: use Connect4 database from UTS Library to get the relevant data/information ? Overall standalone valuation and sensitivities/scenarios based on the three above valuation methods: these should be summarised in terms of valuation ranges in the “presentation” section with supporting tables in the “appendices” section o Use a valuation football field (e.g., Exhibit 3.60 in Rosenbaum and Pearl) in the “presentation” section ? Sources of synergies — provide quantitative details on the sources of synergy and value creation. o You should have a separate slide that addresses this issue and explains each of the sources and your assumptions regarding this in some detail 25735 Mergers & Acquisitions 3 ? Synergy valuation and sensitivities/scenarios o You need to identify specific sources of synergies and forecast the expected synergy cash flows: o What are the magnitudes of the synergies? o How long will the synergies last? o You should value the synergies using the DCF method C. Deal Structure and Other Analyses (30 marks) The first four points in the following list should inform you recommendations on the following points. ? Target company’s annotated share price over the last 52 weeks ? Target’s ownership structure summary – this might have potential effect on bidding strategy ? Acquisition risks: identify potential risks such as: o Asset/accounting quality, integration issues and o Potential regulatory concerns: ACCC, industry specific regulation etc. ? Control premium: Recommended bid price and upper and lower bound o The recommendation for the control premium should be based on the valuation of the target and the potential synergies o You also need to consider the factors that affect