Yanzhou Bids Cas - 1413 Words

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†¦show more content†¦Mandating that the coal be sold at an arm’s length basis according to international benchmarks is reasonable. This will ensure the coal is sold at fair market value, and will prevent China from benefiting unduly and taking advantage of the Chinese ownershi p interest in Yancoal. The requirement to list shares of the Australian Stock Exchange and have at least 30% of the shares available for sale will ensure that the company remains publicly-held and not closely-controlled by Chinese ownership stakes. Conversely, the stipulation that Yancoal be staffed primarily by Australian managers and sales force is an area that has the potential to limit Yancoal in such a way that is detrimental to overall operations. The previous stipulations primarily ensure that the Australian government can maintain a necessary level of oversight, while this stipulation potentially interferes with Yancoal’s ability to staff key position with the most qualified personnel. China is one of Yancoal’s primary coal consumers, and Chinese talent will be able to offer valuable knowledge of the local business customs and customer needs, servicing the market in a more meaningful, competitive style than Australian employees may be able to do. This also eliminates Yancoal’s ability to bring in talent from around the globe that can offer a skill set which provides a competitive advantage. Global giant Google realized that they made exactly this mistake by mandating that all management personne l