Not all mergers are equal
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.