A Case Study on Mergers and Acquisitions - The Case of Company W Merge Company D in Semiconductor Industry
Date Issued
2012
Date
2012
Author(s)
Wang, Chih-Cheng
Abstract
M&A is originated from Europe and the United States. The number of M&A cases in Taiwan is less than Europe and the United States, but many cases are very successful. This makes M&A popular in Taiwan and become an important method of corporate growth.
In the past few years, there are many M&A cases in semiconductor industry in Taiwan. For example, UMC 5 to 1 merger in 2000, and later TSMC Acquiring ASMC and WSMC.
The case of this study is the merger of company W and company D in 2008. The major business of Company W is IC testing and packaging in semiconductor backend field. The major business of Company D is wafer fabrication in semiconductor frontend field. This is a case of vertical merger, different from normal cases of horizontal merger in semiconductor industry. The original goal of this case is to get the asset of target company by merger. This can solve the lack of space issue that impact Company W’s corporate growth. Later, the goal becomes to get the asset and operation of target company by merger. This can make corporate growth by vertical integration. But after analyze the industry structure, evaluate the target company and evaluate the risk of merger, company W gave up the operation of target company and decided to merge the asset of the target company only.
The merger procedure and merger strategy will be analyzed in this study. Industrial structure will be analyzed by using five-force model. The strategic evaluation of whether develop the merged company as an IDM vendor by vertical integration will be done also. Both Discounted Cash Flow method and Liquidation Value Method will be used to evaluate the target company. Because company D was a loss company, operation risk is a very important consideration. Sensitivity Analysis will also be used to analyze how total asset turnover rate, growth margin and cost of capital can affect corporate value. The result of evaluation will be compared to the actual merger price. The rationality of the actual merger price will be verified. How corporate value and operation risk can affect the motivation of M&A will be studied also.
Hope the result and suggestion of this study can be useful for companies they want to do M&A and those who want to study M&A.
Subjects
M&A
Semiconductor Industry
Discounted Cash Flow
Sensitivity Analysis
Liquidation Value Method
Five-force Model
Type
thesis
File(s)![Thumbnail Image]()
Loading...
Name
ntu-101-P94746023-1.pdf
Size
23.32 KB
Format
Adobe PDF
Checksum
(MD5):f5a6ecb3cf6dfd1107513dedc854cb99