Choose two of the following three tasks and write a single academic essay that addresses both of the tasks selected (50 marks).
1. You are required to critically evaluate the academic literature regarding the success or failure of merger and acquisition activity and conclude with an informed judgement as to whether the evidence from the literature would suggest that shareholders of 21st Century Fox should welcome or be wary of the two competing bids for their company. You are in your conclusion to come to a specific recommendation of how you would advise a shareholder to vote in the 27th of July 2018 shareholder meeting. Your answer should only use information that was available up until the date of the July 27th vote.
2. You are required to come to a judgement regarding the ability of managers to judge the value of another company when engaging in acquisition activity. Your answer should specifically show an engagement with the academic literature regarding both the efficiency of the stock market and share valuation. Your answer should include an evaluation of the decision of either Disney or Comcast to value their bids at the respective amounts, specifically discussing the difficulties in placing asset price values on the creative assets that they are attempting to purchase. Your answer should conclude with a judgement of the risks involved for either Disney or Comcast in accurately pricing these assets in this fast-moving entertainment based industry.
3. You are required to critically discuss the impact of cost of capital & capital structure on the ability of companies to generate acceptable returns for shareholders. Your answer should display a thorough and extensive engagement with appropriate academic literature and come to an informed judgement regarding the overall impact of capital structure on the ability to generate wealth. Your answer should specifically examine the impacts on either Disney or Comcast’s shareholders of the structure and value of their respective companies (and shares). In your answer you should assume that Disney’s offer is an all share offer financed solely through issuing new shares, and Comcast’s cash offer is financed through entirely new debt issuance. You come to a conclusion as to impact of a possible post-deal cost of capital & capital structure upon the ability of either Disney or Comcast to generate acceptable returns for shareholders.