Loading...
|
Please use this identifier to cite or link to this item:
https://nccur.lib.nccu.edu.tw/handle/140.119/31302
|
| Title: | 實用選擇權觀點下之策略性併購：以富邦北銀之合併為例
Real Options in Strategic Acquisition: A Case Study of the Fubon-Taipeibank Merger |
| Authors: | 鄧森文
DERN, VINCENT |
| Contributors: | 周行一
CHOW, EDWARD H.
鄧森文
DERN, VINCENT |
| Keywords: | 併購
實用選擇權
富邦金控
台北銀行
Mergers and acquisitions
Real options
Fubon Financial
Taipeibank |
| Date: | 2003 |
| Issue Date: | 2009-09-14 09:45:46 (UTC+8) |
| Abstract: | Despite high failure rate, M&A remains a dominant strategy for corporations seeking expansion in a mature market, such as Taiwan’s financial market. What’s more, acquirers often pay premiums over targets’ market price for acquisitions. A combination of M&A and real options theories is introduced to better explain management’s rationale behind strategic acquisitions. To highlight the strategic moves without mathematical calculation, this paper adopts a strategic real options approach to analyze a case in point – the Fubon-Taipeibank merger. Using the real options strategy, the acquisition becomes an initial service platform expansion toward Fubon’s vision of becoming a leading regional financial institution in Asia. The exercise of Fubon’s option (buying Taipeibank) solidifies its market position with enhanced capitals and revenues, and serves as an option of follow-up M&As.
Real options also inspire the M&A integration process. Three key stages, namely target identification, negotiation, and integration, are taken as options, one leads to another. The purpose is to maximize shareholders’ value by applying real option thinking to demonstrate management flexibility along the M&A process, which cannot be seen by other capital budgeting approaches.
Despite high failure rate, M&A remains a dominant strategy for corporations seeking expansion in a mature market, such as Taiwan’s financial market. What’s more, acquirers often pay premiums over targets’ market price for acquisitions. A combination of M&A and real options theories is introduced to better explain management’s rationale behind strategic acquisitions. To highlight the strategic moves without mathematical calculation, this paper adopts a strategic real options approach to analyze a case in point – the Fubon-Taipeibank merger. Using the real options strategy, the acquisition becomes an initial service platform expansion toward Fubon’s vision of becoming a leading regional financial institution in Asia. The exercise of Fubon’s option (buying Taipeibank) solidifies its market position with enhanced capitals and revenues, and serves as an option of follow-up M&As.
Real options also inspire the M&A integration process. Three key stages, namely target identification, negotiation, and integration, are taken as options, one leads to another. The purpose is to maximize shareholders’ value by applying real option thinking to demonstrate management flexibility along the M&A process, which cannot be seen by other capital budgeting approaches.
Section 1 Introduction 1
Section 2 Background Information 5
2.1 The Liberalization of Taiwan’s Financial Market 5
2.2 Introduction of Fubon Financial Holding Company 10
2.3 Introduction of Taipeibank 14
2.4 The Merger 16
Section 3 Literature Review 21
3.1 Mergers and Acquisitions 21
3.2 Real Options 35
Section 4 Research Methodology 51
4.1 Mapping a M&A Investment onto a Call Option 52
4.2 Multistage Real Options of Acquisition 55
Stage 1: Target Identification 59
Stage 2: Negotiation 60
Stage 3: Integration 63
4.3 When to Exercise 65
Section 5 Analysis 68
5.1 Strategic Value and Thinking Effort 71
Strategic Value 1: Think Big 72
Strategic Value 2: Bank’s Unique Role as a Service Channel 73
Strategic Value 3: Complement to the Composition of Fubon Financial 74
Strategic Value 3: Keep Options Open 75
Strategic Value 4: Strategic Fit of Product Lines and Sales Channel 76
Strategic Value 5: Now or Never 78
5.2 Flexibility Value and Acquisition Premium 79
Flexibility Value: Stock Swap 80
Avoid Overpricing: Due Diligence 82
5.3 Synergistic Value and Integration Cost 83
Integration Cost: Employee Resistance 83
Synergistic Value: Economies of Scope and Scale 87
5.4 Options in a Business Strategy 88
5.5 Post Merger Performance 92
Business Performance 92
Panelist Survey 96
Section 6 Conclusion 98
Bibliography 102 |
| Reference: | Ø Alexander, G.J., P.G. Benson and J.M. Kampmeyer, 1984, “Investigating the Valuation Effects of Announcement of Voluntary Corporate Sell-offs”, The Journal of Finance, Vol. 39, No. 2, June, pp. 503-517
Ø Amram, M. and N. Kulatilaka, 1999, Real Options: Managing Strategic Investment in an Uncertain World, Boston: Harvard Business School Press.
Ø Amram, M. and N. Kulatilaka, 2000, “Strategy and Shareholder Value Creation: The Real Options Frontier”, Journal of Applied Corporate Finance, Vol. 13, No. 2, pp. 8-21.
Ø Barkema, H. and F. Vermeulen, 2001, “Learning Through Acquisitions”, Academy of Management Journal, Vol. 44, No. 3, pp. 457-476.
Ø Berkovitch, E. and M.P. Narayanan, 1993, “Motives for Takeovers: An Empirical Investigation”, Journal of Financial and Quantitative Analysis, Vol. 28, No. 3, September, pp. 347.
Ø Blackburn, V.L., F.H. Dark and R.C. Hanson, 1997, “Mergers, Method of Payment and Returns to Manager- and Owner-Controlled Firms”, The Financial Review, Vol. 32, No. 3, August, pp. 569-589.
Ø Boer, F.P., 2002, The Real Option Solution: Finding Total Value in a High-Risk World, New York: Wiley.
Ø Botteron, P., 2001, “On the Practical Application of the Real Options Theory”, Thunderbird International Business Review, May/June, Vol. 43, Issue 3, pp. 469.
Ø Brewer, E. III, 1990, “The Risk of Banks Expanding Their Permissible Non-banking Activities”, The Financial Review, November, Vol. 25, Issue 4, pp. 517-538.
Ø Brewer, E., W.E. Jackson, J.A. Jagtiani and T. Nguyen, 2000, “The Price of Bank Mergers in the 1990s”, Economic Perspectives, Issue Q I, pp. 2-23.
Ø Cullinan, G, J. Le Roux, and R. Weddigen, 2004, “When to Walk Away from a Deal”, Harvard Business Review, Vol. 82, Issue 4, pp. 96-110.
Ø DeYoung, R., 1997, “Bank Merger, X-efficiency, and The Market for Corporate Control”, Managerial Finance, Vol. 23, No. 1, pp. 32-47.
Ø Dixit, A.K. and R.S. Pindyck, 1995, “The Option Approach to Capital Investment”, Harvard Business Review, May-June, pp. 105-115.
Ø Gropper, D.M, 1991, “An Empirical Investigation of Changes in Scale Economies for the Commercial Banking Firm, 1979-1986”, Journal of Money, Credit, and Banking, Vol. 23 No. 4, November, pp. 718-726.
Ø Gupta, D. and Y. Gerchak, 2002, “Quantifying Operational Synergies in a Merger/Acquisition”, Management Science, Vol. 48, No. 4, April, pp. 517-533.
Ø Hameeteman, D. and B. Scholtens, 2000, “Size, Growth, and Variance Among the World’s Largest Non-Merged Banks”, International Journal of the Economics of Business, November, Vol. 7, Issue 3, pp. 313-324.
Ø Hansen, R.G., 1987, “A Theory for the Choice Exchange Medium in Mergers and Acquisitions”, Journal of Business, Vol. 60, No. 1, pp. 75-95.
Ø Heron, R. and E. Lie, 2002, “Operating Performance and the Method of Payment in Takeovers”, Journal of Financial and Quantitative Analysis, Mar, Vol. 37, Issue 1, pp. 137-156.
Ø Hopkins, H.D., 1999, “Cross-border Mergers and Acquisitions: Global and Regional Perspectives”, Journal of International Management, No. 5, pp. 207-239.
Ø Howell, S., A. Stark, D. Newton, D. Paxson, M. Cavus, J.A. Azevedo-Persira and K. Patel, 2001, Real Options: Evaluating Corporate Investment Opportunities in a Dynamic World, Edinburgh: FT Prentice Hall.
Ø Ijiri, Y. and H.A. Simon, 1971, “Effects of Mergers and Acquisitions on Business Firm Concentration”, The Journal of Political Economy, Vol. 79, No. 2, pp. 314-322.
Ø James, C.M. and P. Wier, 1987, “Returns to Acquirers and Competition in the Acquisition Market: The Case of Banking”, Journal of Political Economy, 95, 2, April, pp. 355.
Ø Jemison, D.B. and S.B. Sitkin, 1986, “Corporate Acquisitions: A Process Perspective”, The Academy of Management Review, Volume 11, Issue 1, Jan., pp. 145-163.
Ø Jensen, M.C. and R.S. Ruback, 1983, “The Market for Corporate Control: The Scientific Evidence”, Journal of Financial Economics, 11, pp. 7, 8.
Ø Kane, E.J., 2000, “Incentives for Banking Megamergers: What Motives Might Regulators Infer from Event Study Evidence”, Journal of Money, Credit and Banking, Vol. 32, No. 3, pp. 671-701.
Ø Keeton, W.R., 1990, “Bank Holding Companies, Cross-Bank Guarantees, and Source of Strength”, Economic Review - Federal Reserve Bank of Kansas City, May/Jun, Vol. 75, Issue 3, pp. 54-68.
Ø Larsson, R. and S. Finkelstein, 1999, “Integrating strategy, Organizational, and Human Resource Perspectives on Mergers and Acquisitions: A Case Survey of Synergy Realization”, Organizational Science, Jan.-Feb., Vol. 10, Issue 1, pp. 1-26.
Ø Loughran, T. and A. Vijh, 1997, “Do Long-Term Shareholders Benefit from Corporate Acquisitions”, Journal of Finance, December, Vol. 52, pp. 1765-1790.
Ø Luehrman, T.A., 1997, “What’s It Worth? A General Manager’s Guide to Valuation”, Harvard Business Review, May-June, pp. 132-142.
Ø ______________, 1998, “Investment Opportunities as Real Options: Getting Started on the Numbers”, Harvard Business Review, July-August, pp. 51-67.
Ø ______________, 1998, “Strategy as a Portfolio of Real Options”, Harvard Business Review, September-October, pp. 89-99.
Ø Rose, P.S., 1989, “Diversification Of The Banking Firm”, The Financial Review, May, Vol. 24, Issue 2, pp. 251-281.
Ø Ross, S.A., R.W. Westerfield and J. Jaffe, 2001, Corporate Finance, 6th edition, New York: McGraw-Hill.
Ø Selden L. and G. Colvin, 2003, “M&A Needn’t To Be a Loser’s Game”, Harvard Business Review, June, pp. 70-79.
Ø Shelton, L.M., 1988, “Strategic Business Fits and Corporate Acquisition: Empirical Evidence”, Strategic Management Journal; May/Jun, pp. 279.
Ø Smit, H.T.J., 2001, “Acquisition Strategies as Option Games”, Journal of Applied Corporate Finace, Vol. 14, No. 2, pp. 79-89.
Ø Templeton, W.K. and J.T. Severiens, 1992, “The Effect of Non-Bank Diversification on Bank Holding Company Risk”, Quarterly Journal of Business and Economics, Autumn, Vol. 31, Issue 4, pp. 3-18.
Ø Trigeorgis, L., 1991, “A Log-Transformed Binomial Numerical Analysis Method for Valuing Complex Multi-Option Investments”, Journal of Financial and Quantitative Analysis, Vol. 26, No. 3, September, pp. 309-326.
Ø ____________, 1993, “The Nature of Option Interactions and the Valuation of Investments with Multiple Real Options”, Journal of Financial and Quantitative Analysis, Vol. 28, No. 1, March, pp. 1-20.
Ø ____________, 1996, Real Options: Managerial Flexibility and Strategy in Resource Allocation, Cambridge, Massachusetts: The MIT Press.
Ø ____________, 1999, Real Options and Business Strategy – Applications to Decision-Making, London: Risk Publications.
Ø Tsai, E., 2002, “Taiwan: An overview of recent developments in M&A law”, International Financial Law Review, London, pp. 59-61.
Ø Wall, L.D, A.K. Reichert, and S. Mohanty, 1993, “Deregulation and the Opportunities for Commercial Bank Diversification”, Economic Review - Federal Reserve Bank of Atlanta, Sep/Oct, Vol. 78, Issue 5, pp. 1-25.
Ø Taipeibank Annual 2002 Report
Ø Fubon Financial Holding Company 2002 and 2003 Annual Report |
| Description: | 碩士
國立政治大學
國際經營管理碩士班(IMBA)
91933012
92 |
| Source URI: | http://thesis.lib.nccu.edu.tw/record/#G0091933012 |
| Data Type: | thesis |
| Appears in Collections: | [國際經營管理英語碩士學程IMBA] 學位論文
|
Files in This Item:
| File |
Size | Format | |
|---|
| index.html | 0Kb | HTML2 | 587 | View/Open |
|
All items in 政大典藏 are protected by copyright, with all rights reserved.
|
