Takeover Mania? - 7 May 2007

This Problem Based Learning (PBL) activity looks at the issue of takeovers, or acquisitions. It features two acquisitions that have appeared in the news in the spring of 2007: the bid for high street chemist chain Alliance Boots, and the bid for the Dutch bank ABN Amro. These are just two examples in a spate of acquisition activity, which has fuelled the growth of the stock market in the last three years. Other well-known firms are also involved in possible takeover activity, including supermarket giant Sainsbury's.

There are many issues that can be explored in this area - the learning objectives below give some leads as to possible avenues of investigation.

Learning Objectives

At the end of this PBL activity, students might have covered some of the following areas:

• The distinction between a takeover and a merger
• Different types of acquisition - horizontal, vertical, conglomerate
• Reasons for acquisition
• The role of private equity in business finance
• The conflict of stakeholder interests as a result of acquisitions
• The nature and role of the regulatory authorities in acquisitions
• The impact on competition as a result of acquisitions
• Different types of takeover bid - hostile and friendly
• The role of 'white knights' in takeovers
• The effects of acquisition activity on stock markets

Resources:

• The Problem: Takeover Mania?
• References for Investigation