Pharmacyclics and Mergers

Instructions to Student
• The marks received on the assignment will be scaled down to the actual weightage of the assignment which is 30 marks.

Case study #1 (40 marks)
A. On March 2, the chief executive of Johnsen & Johnsen, Pfizer and AbbVie all rushed to California to make one last pitch to Pharmacyclics, a cover drug maker with just one product to its name. All three were bidding to buy the company and, two days later, AbbVie prevailed in a fiercely contested auction, splashing $21bn on a cash-and-shares deal. It valued Pharmacyclics at a 60 per cent premium to its share price in early February—and exemplified the competition for pharmaceuticals assets that has driven global deal making.

In the first three months of 2015, the total value of healthcare deals reached $95.3 bn. This feverish M&A activity has been led by drug makers seeking new treatments that can replace the billions of dollar in sales they will lose when their existing patents expire. Analysts say the ‘eat or be eaten’ mindset will drive further deal activity in the coming months, as smaller drug companies such as Endo Pharmaceuticals and Mallinckrodt look to challenge their larger rivals for other assets.

1- Lists at least five motives for merger and acquisition. Support your explanation with relevant example. (12 marks)
2- Explain the alternative methods of payment for target firms and comment on the advantages and disadvantages. (16 marks)

3- Explain the terms horizontal mergers, vertical mergers and conglomerate mergers and support your answer by providing an example for each type of merger (12 marks)

Case study#2 (20 marks)
A merger or acquisition may be a tax-free reorganization or a taxable transaction under the principles. There may also be state tax consequences from some types of M&A transactions. Discuss about the effective tax strategies to manage merger and acquisition (M&A)? Support your answers with relevant examples and literature reviews. (20 marks)

Rules & Regulations:
• All resources should be cited using APA 7th edition referencing style.
• The final assignment must have a Title page, Table of Contents, References/ bibliography using APA 7th edition referencing style and page numbers.
Assignment must be computer typed.
 Font – Times New Roman
 Font – Style – Regular
 Font – Size – 12
 Heading should be with Font Size 14, Bold, Capital and Underline.