Amy Wu, former reporter for Time magazine and The Deal LLC, presents "Mergers and Acquisitions 101," a free webinar hosted by the Donald W. Reynolds National Center for Business Journalism. During the one-hour session, Wu covers the DNA of an M&A story, essential ingredients of the M&A story, and the ABCs of writing the basic M&A story. For more information about business journalism training and resources, please visit http://businessjournalism.org.

1. M&A 101
Presented by Amy Wu
June 3, 2014

2. Get ready to Test your M&A savvy
Ready? Set, Go!
YES or NO?
A merger is the same
thing as an acquisition
QUESTION #1

3. Ready? Set, Go!
YES or NO?
QUESTION #2
Mergers and acquisitions
only involve publically traded
companies

4. It’s big news

5. • Pfizer lures AstraZeneca
• Facebook Buys WhatApp $19 billion
• Google snags Best Labs $3.2 billion
• Global M&A transactions in 2013 was valued at
$2.91 trillion
• 2014 number of deals up from 2013
• Source: Dealogic

6. BIG DEAL AND LITTLE DEALS
• Major deals - $1 billion and upwards
• Middle market - $100 million -$500 million
• Small-cap deals – up to $50 million

7. What’s the difference between a merger and
acquisition?

8. QUICK CHAT: IS IT A MERGER OR
ACQUISITION?
• Apple wants to buy Skullcandy and
is using a portion of their stock in
the purchase
• Merger or acquisition?
• Acquisition. When stock is used as
part of the currency, that's usually a
good sign that company is the
acquirer and it is not a merger.

9. DNA OF AN M&A STORY

10. THE BASICS
• Is it a merger or acquisition?
• How much is the merger or
acquisition
• Names of both companies and
CEOs
• Head quarters of both
companies
• How is the deal valued; stock vs.
cash transactions
•

11. ACQUIRING THE INGREDIENTS
• Press conference
• Conference call
• Company websites: official press releases
• Investor relations: provides investors with an accurate account of the
company's affairs
• SEC’s (U.S. Securities and Exchange Commission) Edgar database

12. BEYOND THE BASICS
• Why is this deal significant? (the
company, the price)
• Why is the timing important? Why
now?
• How long have talks been going
on for?
• What is the company’s strategy?

13. BEYOND THE BASICS II
• Research analysts at investment banks
• Research firms e.g. Forrester
Research, Nielsen Group, Dealogic
LLC
• The company (CEO, CFO, in-house
lawyers)
• Universities and business schools
•

14. GO DEEPER
• How is the deal valued; stock vs.
cash transactions
• Who (founder and/or employees) is
receiving the stock units, and how
much?
• Stock vs. cash transactions and
what that suggests
• Price of shares before, during and
after the deal, what this means

15. AND EVEN DEEPER: HOW MERGERS AND ACQUISITIONS
AFFECT STOCK PRICES
• Stock prices Can Change Even After A Merger Is Announced
• Acquiring company's stock will fall
• Target company’s stock will rise
• Uncertainty can lower prices

16. WHY ARE PRICES AFFECTED?
• Target company's stock usually goes up
• Acquiring company (typically) needs to pay a premium for the acquisition
• Acquiring company's stock usually goes down
• Acquiring company must pay more than the target company currently is
worth to help the deal go through
• Uncertainty and additional challenges

17. HOW TO GO DEEPER
• Investment banks who led the
deal
• Law firms who led the deal
• What banks and law firms
advised both companies? What
were the previous relationships
with the companies?

18. AND EVEN DEEPER
• Who is the winner and who is the loser,
and why?
• Which executives will remain in charge
and who's packing? Same with directors
• Where will company be based?
• How is the consumer impacted?
• How does this deal compare with the
companies’ previous deals?
• How does it compare with deals in the
same sector?

19. THE M&A PUZZLE GAME
• A) Facebook, based in Menlo Park, Calif., will pay $4 billion in cash and $12 billion
worth of shares for WhatsApp.
• C) On Wednesday Facebook announced it would pay at least $16 billion for
WhatsApp, a text messaging application.
• B) The price shows that Facebook’s co-founder and chief executive, Mark Zuckerberg, will go to
protect his company’s turf as the dominant social network on the web.
• Put them in order of priority based on the letters of the
puzzle

20. THE ANSWERS
• C
• A
• B

21. Ready? Set, Go!
YES or NO?
QUESTION #3
• Apple buys Skullcandy and Skullcandy’s stock rises after the
announcement and the stocks of Apple’s fall.
• Who is the acquirer?
• Apple

22. Ready? Set, Go!
YES or NO?
QUESTION #4
Mergers and acquisitions
occur on the national,
regional and local level

23. It is not just global, it’s local

24. ANATOMY OF AN M&A STORY

25. KEY TERMS
• Hostile takeover

26. • Bear hug

27. • Tender offer

28. • Private equity firm

30. • Poison pill

31. QUICK CHAT: THE SIX TERMS GAME
READY, SET GO!
WHAT KIND OF DEAL IS IT?
• In 2009, U.S. food company Kraft Foods bids
£10.5bn for Cadbury
• Cadbury's chairman Roger Carr said the offer was
an attempt to "buy Cadbury on the cheap"
• Kraft ups the bid to £11.5bn, and says there will be
no compulsory redundancies in manufacturing for
two years
• In 2010 the bid is accepted
• After the deal is sealed in 2010 Kraft closes one of
Cadbury’s factories and cuts 400 jobs

32. HOSTILE TAKEOVER

33. IN SUMMARY
• No deal is equal
• Mergers and acquisitions are not the same
• The five essentials of a deal story
• The various levels of a deal story
• Critical sources and where to find them
• Deal lingo

34. M&A IS A TREASURE CHEST OF STORIES

35. Thank you
awu1@umd.edu
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