Not all merg­ers are equal

Finweek English Edition - - NEWS - Marc Ash­ton marca@fin­

Afew years ago I sat down with for­mer Sa­sol chief ex­ec­u­tive of­fi­cer Pat Davies and I be­gan dis­cussing an an­a­lyst re­port that pro­posed a merger with another global player. Davies shrugged and said: “An­a­lysts love to dream up this stuff, but rarely think about the prac­ti­cal ap­pli­ca­tions in­volved in putting to­gether a ma­jor merger. It’s one thing to write a re­port and another to put to­gether the ac­tual deal.”

Each year, the Univer­sity of Cape Town (UCT) Col­lege of Ac­count­ing, un­der se­nior lec­turer Paul Maughan, puts to­gether an in­no­va­tive Merg­ers & Ac­qui­si­tions (M& A) pro­ject with stu­dents who are di­vided into teams, each rep­re­sent­ing listed busi­nesses. This year the in­vest­ment uni­verse was ex­panded to in­cor­po­rate in­ter­na­tional teams to bet­ter ref lect the global na­ture of M& A ac­tiv­ity.

Teams are re­quired to put deals to­gether with other ‘cor­po­rates’ with­out alert­ing third par­ties to their deal­ings. Teams whose deals are ‘ leaked’ will in­cur penal­ties, while cor­po­rate raiders who catch wind of other deals will earn bonus marks.

Maughan told Fin­week: “The M& A pro­ject ex­cites us at t he Col­lege of Ac­count­ing be­cause the stu­dents re­ally do go above and be­yond the call of duty and learn a lot out­side of the class­room. Their knowl­edge of their com­pa­nies of­ten sur­passes our own and in dis­cus­sions both stu­dents and lec­tur­ers are learn­ing to­gether. Ne­go­ti­a­tions among the class are also a high­light and hear­ing all the sto­ries of of­fers made, re­jected and then f in­ally ac­cepted is grip­ping. The series Suits is used as a theme and stu­dents start bring­ing out their in­ner Har­vey Specter or Jessica Pear­son. The Grand Fi­nale is also al­ways a high­light and serves as a vale­dic­tory mo­ment for the class – fi­nal ex­ams are still to be writ­ten, but it is a mo­ment to cel­e­brate the year as well as the best deals.”

Stu­dent Steve White told Fin­week: “The M& A pro­ject has been an epic mock-re­al­ity pro­ject! All the ups and downs of rep­re­sent­ing our com­pany have been felt.”

Anot her s t udent , Chris topher Hell­mann, added: “The M& A pro­ject pro­vided great in­sight into the ap­pli­ca­tion of only the­ory learnt thus far.”

Maughan said that stu­dents had to think on their feet: “The stu­dents have kept close tabs on the me­dia and SENS an­nounce­ments through­out the year and quite a few com­pa­nies in the class were in­volved in real life M& A deals. We had Ci­pla taken over by Ci­pla In­dia, Af­gri got an of­fer in the fi­nal week of the pro­ject, and it got awk­ward in class for Ad­cock and Bid­vest when they were at each other ear­lier in the year. The in­ter­na­tional Telco com­pa­nies also had a lot of ac­tion with the Vodafone and Ver­i­zon deal in par­tic­u­lar be­ing fas­ci­nat­ing from a f inanc­ing per­spec­tive. Stu­dents re­ally im­pressed us with the way in which they warmed to the com­plex­ity of M& A dur­ing the course of the year and ap­plied all of the knowl­edge that they have picked up dur­ing their time at UCT to the in­tri­ca­cies of an M& A deal. A few stu­dents also ex­pressed an in­ter­est in be­ing in­volved in M& A once they qual­i­fied as CA (SA)s .”

Stu­dent Grace Oke con­curs: “The M& A pro­ject tests your eth­i­cal skills and due dili­gence too, es­pe­cially un­der time pres­sure!”

The win­ning deal was put to­gether by Dario de Wet, Ni­co­las Kat­sapas, Salome Magabe and Hanyani Mabaso rep­re­sent­ing Naspers, and Wesley Kennedy, James Light­body, An­drew Bour­dil­lion and Khay­alethu Ncwina, who rep­re­sented Google.

The deal was ul­ti­mately struck af­ter the Naspers team turned down of­fers from the Vodafone Group, Telkom and Ap­ple. CHECK OUT THE TOP DEALS OVER THE NEXT THREE PAGES.

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