In your assignments this semester, you are required to analyse the recent takeover proposal of Tassal Group. In the individual assignment you will be providing advice to the target. In the group assignment you will be providing advice to the bidder.

A timeline of events indicating when you would be conducting your analysis is provided below. You should conduct your own research from a variety of sources, but must not incorporate information that is only publicly known after your company’s “deadlines” on these tasks.

** This timeline is a basic outline of how the deal has progressed, and is adapted for the purpose of this assignment. Students are expected to go beyond the scope of this outline in researching key aspects of the transaction for both the individual and group assignments.

Indicates the points in the timeline when you would be carrying out your research. In your assignments, you must not incorporate information that is only publicly known after your company’s deadlines on these tasks.

FINC6017 Mergers & Acquisitions S2-2022 Individual and Group Assignments

Tassal Group Deal Timeline **

26 May 2022: The board of Tassal Group Limited (“Tassal”) (ASX: TGR) receives a confidential, non-binding, indicative offer from Cooke Inc. (“Cooke”) to acquire 100% of ordinary Tassal shares for cash consideration of $4.67 per share. The offer is rejected by Tassal’s board.

27 May 2022: Your company has been hired by Tassal to provide strategic M&A advice. Tassal expects that the 26 May offer from Cooke may just be a first-step and the company wants to be better prepared for any further bids.

Your manager has assigned part of this work to you. You are to work individually to assess the strategic rationale for the deal, provide an initial assessment of deal feasibility and advise whether further consideration of a deal with Cooke should proceed. Your report is due to your manager by 3 June 2022.

6 June 2022: In closed-door negotiations between the bidder and target, Cooke increases its offer to $4.80 per share. The offer is again rejected by Tassal’s board.

22 June 2022: Australian business media reports on the news that former Chairman of Tassal, David Williams, has acquired an equity interest of close to 5% in Tassal through a holding company called Amore Foods. Williams is a well-known M&A adviser at the Melbourne-based investment banking firm Kidder Williams. The news triggers speculation about a prospective deal involving Tassal.

27 June 2022: Cooke discloses to the ASX a substantial holding of 5.398% in Tassal after the ASX market closed. It is revealed that Amore Foods was acting as a nominee for Cooke in building the toehold stake. Cooke further increases their offer to the Tassal board and lifts the offer confidentiality clause.

28 June 2022: Tassal confirms prior to the market open that the company had received a non-binding, indicative and conditional offer from Cooke to acquire 100% of ordinary Tassal shares for cash consideration of $4.85 per share. The board of Tassal states that the indicative offer does not reflect the value of the company and advised that it would not be in the best interests of shareholders.

29 June: Your team is hired by Cooke to provide advice on the bid strategy for Tassal and provide a recommendation for next steps. Your pitch to Cooke is due by 12 August 2022.

FINC6017 Mergers & Acquisitions S2-2021

Group Assignment: Deal Advisory Report and Pitch Presentation Due: 11:59pm, Monday 31^st October 2022 (week 13)

Report word limit: 14 pages for main report, plus up to 6 pages of appendix material

Report weight: 30%

Presentation length: 5-6 minutes

Presentation weight: 15%

It is late June 2022. You and your team have been hired to advise Cooke on the bid strategy for Tassal and provide a recommendation for next steps. Your pitch to Cooke is due by 12 August 2022. Cooke has so far made three offers to acquire Tassal, all of which have been rejected by Tassal’s board. The senior management of Cooke is interested to hear your analysis regarding the rationale, valuation, potential deal structures, and likely outcomes and risks of a transaction. Your task is to prepare a comprehensive deal advisory report that addresses the requirements set out below. You also need to prepare a slide deck and present your analysis and recommendation as a pitch to Cooke by 12 August. If all goes well, they will implement your ideas and proceed with your recommendation.

The deal advisory report should be written for the management of Cooke and provide an in-depth analysis of the strategic rationale, valuation and recommended next steps. You are expected to conduct valuation analysis and deal strategy for this group report. Discussion should contain both qualitative and quantitative aspects, where your arguments and conclusions are based on the outcomes of your research.

Report structure and mark breakdown:

Executive summary (1 mark)

Use this section to concisely summarise the key issues and recommendation/s of your report.

Industry overview (2 marks)

Provide an overview of the industry in which the target and acquirer operate. Questions you might consider examining include: What are the key drivers of the industry? What is the relative size of the target in the industry? How have previous M&A deals affected the industry? What is the near-term outlook for M&A in this sector?

Strategic rationale (2 marks)

Examine the key motives and drivers behind the deal. This section should include discussion of the benefits and opportunities. You might also consider the ownership, management and operations of the target and bidder. Your response should consider the theories and empirical evidence discussed in class in addition to your independent research.

Deal valuation (8 marks)

Determine an acquisition offer price for the target. Items that you should consider in this section include: What is the standalone value of the target company? What assumptions did you make to come to this conclusion on valuation? In particular, you need to clearly explain and justify your growth and discount assumptions. What are the achievable synergies (if any) of the transaction and how large are they? What is the control premium payable (if any) of the deal? What is the NPV of the transaction? In your response, you should provide the range of offer prices which you believe to be ‘fair and reasonable’ given your valuation analysis, and consider the context of the offer history in the deal to this point in time. You should also conduct sensitivities where relevant to confirm the robustness of your model and conclusions.

Transaction structure (5 marks)

In this section you should consider: How should the deal be structured if it proceeds? Should a scheme of arrangement be used or should it be a takeover? What conditions should be attached to the offer? What approach should the acquirer take? What form of consideration should be used? What should the offer be, and is there scope for this to be revised further? How should the deal be financed?

Risks and market reaction (5 marks)

Analyse the deal risks and identify possible mitigation strategies. For example: What risks exist for the acquirer in undertaking this transaction? What approvals would have to be sought before the takeover could be completed? What are the relevant regulatory risks? What can you learn from sector precedents? What would be the likely response of target shareholders, and how could this be best managed? How could the bidder’s strategy manage these risks? What has been the market reaction to the deal evolution so far?

Deal strategy and recommendation (4 marks)

Identify a set of possible actions the bidder can take and provide a final recommendation based on your analysis in this report. Your recommendation should be clearly stated and outline implementable next steps for the bidder.

Professional report formatting and team work (3 marks)

It is important to consider your formatting choices and present a professional looking report. It is recommended you consider how charts, tables, subheadings and dot points, colour and other formatting techniques can be used enhance the way you present your findings. One mark of this item is allocated to team work, where the consistency of the report in formatting and style will reflect the quality of team work. If you complete the group assignment individually, you will receive zero for this component.

Further report requirements

Address the requirements of the report clearly. Marks will be awarded for the clarity and depth of your analysis, the structure of your report and how you present your findings. Please use minimum 10pt font with 2cm margins and include all references, if required, in a bibliography. Faculty and/or university referencing requirements must be followed and academic honesty policies apply. Title page, table of content and reference section do not count towards page limit.

Written reports must be submitted via the Canvas submission link labelled ‘Group Assignment Report’ as a word of pdf document. You also need to submit your valuation workings. Workings will not be directly graded, but will assist the examiner in determining your valuation methods. Submit your workings as an Excel spreadsheet via the ‘Group Assignment – Supporting workings’ link in Canvas. Please ensure you have submitted your report and supporting workings, and that you document your submission (confirmation email/screenshot) to avoid late submission penalty issues.

Only one member of the group needs to make the submission. Where multiple team members have submitted documents, we will assess only the final submission.

Presentation requirements and mark breakdown

You need to present your recommendation as a pitch to the bidder. Your pitch must be a pre-recorded video in which all team members present and a pitch slide deck (in PowerPoint or similar). The length of the pitch presentation needs to be between 5 (minimum) and 6 (maximum) minutes. The content of your presentation should cover all of the sections outlined in the report requirements, and will be marked on the following criteria:

Persuasiveness of argument (4 marks)

How effectively as a team do you present your recommendation? Is it a convincing pitch?

Quality of content presented (4 marks)

There is a lot of content in the report. You have to make decisions about how you fit that into a short period of time and how you structure your pitch to prioritise your key message and recommendation.

Professional oral communication (3 marks)

Clear and confident language that would be suitable to a professional corporate environment.

Professional slide formatting (2 marks)

Are your slides clear, consistent, and support your pitch?

Evidence of team-work (2 marks)

Can you find a way to demonstrate in your pitch that you worked together as a team? This can be challenging in the remote study environment, but might be as simple as ensuing a consistent format and dress code and/or including a brief mention of who makes up your team. If you complete the group assignment individually, you will receive zero for this component.

Further pitch presentation requirements

Presentation recordings must be submitted via the Canvas submission link labelled ‘Group Assignment Presentation’. You also need to submit your slide deck via the ‘Group Assignment –Slide deck’ link in Canvas.

A suggested approach to recording your presentation is to use the recording feature in zoom, including the active speaker during a shared screen presentation. You might alternatively use more advanced video editing skills to think about how to put the presentation together.

Only one member of the group needs to make the submission. Where multiple team members have submitted documents, we will assess only the final submission.

FINC6017 Mergers & Acquisitions S2-2022 Assignment: Useful resources

**This is not an exhaustive list of resources. You are encouraged to conduct your own research and utilise a range of information and data resources.

Company reporting

Tassal Group investor centre: https://tassalgroup.com.au/investors/

ASX announcements: https://www2.asx.com.au/markets/trade-our-cash- market/historical-announcements

Connect 4 database

Connect 4 comprises a collection of specialised databases providing documents and customised reports relating to companies listed on the Australian Securities Exchange (ASX). Search Connect 4 in university Library and you will see the link to the database.

DatAnalysis Premium (Morningstar)

Provides fundamental equity data for listed and delisted companies including revenue and expense breakdowns, financial ratios, growth rates, balance sheet and cashflow data, director buying and selling announcements, company appointments and resignations, merger and acquisition activity and annual reports. All data can be downloaded to Microsoft Excel. Search for DatAnalysis in university Library and you will see the link to the database.

ProQuest/Factiva

A major full-text database covering humanities, social sciences, education, health and medical, science and technology and business and management. This is a good database for searching media articles and academic references. Search ProQuest in university Library and you will see the link to the database.