Yanzhou Bids for Felix Resources Case Study

1. When should stockholders doubt their own company’s support of a friendly acquisition? With a friendly acquisition takeover the firm chooses to make a public offer that is equally accepted by the board when all the terms are agreed upon, which will also need the approval of regulators and also shareholders. The key parameter that drives a deal and is also the key concern for both seller and buyer is known as valuation. There have been a large number of researchers that have studied the effects that have occurred with company takeovers on value with not only on bidder firms, but also the target. From the research done it has shown that stockholders of the target firms end up having a positive outcome. It has shown evidence of a large number of return before the acquisition is actually completed and as well as when the transactions has been done. (Cosh, Andy and Hughes Alan(2008). Centre for Business Research:Takeovers after takeovers; (http://www.researchgate.net/publication/4999297_Takeovers_after_Takeovers)
If the buyout is financed primarily with debt it will make it a leveraged buyout. This will mean that the debt ratio will change in years to come and will lead to changes in the costs of not only equity, but also debt and capital during that time.
When one looks as what acquisitions has to offer it in fact offers firms a short cut to be able to get to the company’s strategic objective although the procedure does have a large cause. This can mean changes in the future for the company.
When one reads the case it states that there were four individuals that had over 56.6% of Felix shares, which can mean that they may all have different calculations for the company. There was a report made and it entailed AUD 20 per share by Yanzhou, which was unexpected and was the cause for the debate. The price offer was