CSX购倂Conrail之后能够产生的综效(synergy)列示

1、Case 2: Consolidated Rail Corporation (A)組員：R94724037 陳柏瀚 R94724079 陳佳汎 R94724019 李禧宜 R93724098 趙恬嘉 R94724027 蔡馥仰 1. (1)Why does CSX want to buy Conrail? (2)How much should CSX be willing to pay for it?Ans: (1)CSX購倂Conrail之後能夠產生的綜效(synergy)列示如下：(a)降低成本：鐵公路事業原本就具有高固定成本的特性，因此當兩家公司合併之後若能有效分散費用（spreadin

2、g overhead），整合資源、人力及兩者間重複或相鄰的鐵道網絡，則可因降低成本而達到規模經濟的效果。CSX預測在購倂Conrail之後因成本降低所帶來的營運收益在2000年可達$370 million。(b)增加市場競爭力及獨占力：由於Norfolk的鐵路網只連結了美國中西部及南部，所以將喪失連結至東北部的遠程市場競爭力，必須向CSX-Conrail借道而行，讓CSX-Conrail增加額外收入。即使是短程載運，CSX-Conrail由於合併後成本降低，也擁有較強的競爭力及價格的獨占力。(c)增加收益：CSX預估合併後於2000年時可增加收益計$180 million，其主要來源為：Nor

3、folk所支付的鐵路使用費。搶下部份貨車運輸市場（trucking industry）的業務。(d)市占率的提升：兩者屬於水平式合併，合併之後營運規模擴大，合計在Railway revenue部份可擴增至每年$8.5 billion，由於成本降低、營運效率增加，原本兩家公司相加近70%的市占率應可再提升而增加收益。此外若能有效降低價格，不僅能從Norfolk搶得更多的客源，也能夠搶攻原本貨車運輸的市場。(e)所得稅利益：合倂之後，CSX可享受Conrail帳上的遞延所得稅資產(deferred tax asset)，得到租稅抵減的效果。(2) Valuation:(a)PV of Synerg

4、y: 首先，我們先從尋找該公司Cost of Equity(Rs)著手，所謂的Rs也就是投資人所要求的報酬率，可根據CAPM理論推導，但需先找出值及市場報酬率(Rm)，推導過程詳Appendix I。假設合併後CSX-Conrail存續10年： levered =1.166 Rm = 8% Rf = 6.54% (10-year), Rb = 8.08% (假設rating = Baa) D/E ratio (market value) = 33% D/A = 25%, E/A = 75% 由CAPM：Ri=Rf + (Rm-Rf)推導 Rs = Rf + equity (Rm-Rf) = 6

5、.54% + 1.166 (8%-6.54%) Rs = 8.24% The Weighted Average Cost of Capital：Rwacc Rwacc = () RB (1-Tc) + () RS = 25% 8.08% (1-35%) + 75% 8.24% = 7.5% Rwacc = 7.5% PV of Synergy = 1,917 million $21.2 per share (詳Appendix II) 目前市價為$71，若加計合併後的Synergy，CSX可支付blended value of two tiered offer的價格上限為$92.2 per s

6、hare。(b)市場Valuation的參考指標TargetOffer Price per share as a Multiple ofTotal Enterprise Valueas a Multiple ofEPSBVSalesEBITDA Santa Fe Pacific21.4X4.5X2.6X13.1X Kansas City Southern14.61.73.69.9 Santa Fe Pacific13.42.81.89.2 Chicago and North Western18.35.52.48.5 Southern Pacific18.43.71.712.2 Average1

7、7.2X3.6X2.4X10.6X 換算Conrail的價格($)83.3116.975.696.0 Conrail Financial Data: Debt = 2,094 million Sales = 3,722 mn EBITDA = 1,017 mn Acquisition shares = 90.5 shares EPS = $4.84 BV = $32.46扣除最高及最低的偏離值，可參考EPS 及EBITDA mutiple的試算結果： 在無競標者出現的情況下，CSX出價價格可介於每股$83.3 $96之間。 (a)所算出的每股$92.2亦介於此區間內2. Analyze the

8、 structure of CSXs offer for Conrail. (1)Why did CSX make a two-tiered offer? What effect does this structure have on the transaction?(2)What are the economic rationales for and the takeover implications of the various provisions in the merger agreement?Ans: (1)Before answer this question, we should

9、 point out some factors that might affect the structure of this transaction : (a) General tax and financial effects between cash tender offer and stock offer: Effects Cash offerStock offerCSX:Acquisition costFixedUncertainDiluted effect on CSXs EPSNoYesShort-term funds needYesNoLeverageYesNoConrails

10、 shareholders:Sharing of future earnings(losses)NoYesTax on transactionTaxable(capital gain)Tax-free(when exchange)PayoffsFixedUncertain (b)Acquisition cost comparison: (stock offer is cheaper relatively) SituationABCDE First stage(Cash offer)0.0%34.3%40%50.1%100.0% Second stage(Share Swap)100%65.7%

11、60%49.9%0% Blended Stock price ($)86.7888.7489.0789.6492.50 (c)From the comparison above, being aware of huge short term fund needs and cheaper acquisition cost, stock offer seems more attractive to the CSX.But for some other factors, CSX made a two-tiered offer structure as bellowed:(i)Front-end te

12、nder offer (40% of acquisition shares):Efficiency and strategy concerns:In the beginning of tender offer, CSX intended to require the majority of Conrails shares to make the acquisition successfully, cash tender offer of $92.5 (better price added a premium on the market value of $71.0) per share pro

13、bably be more attractive to the Conrails shareholders in the sense of “cash is king”, and it could complete the first stage tender offer more quickly and efficiently.The fair value statute concern: (cut the front-end offer into two stages) Pennsylvanias Business Corporation Law regulated Conrail sha

14、reholders would have to “opt-out “of this statute before CSX could purchase more than 19.9% of the shares. For this regulation, CSX execute the first-end offer in two stages. They bought 19.7% of acquisition shares first and executed the second stage cash offer till Conrails shareholders approved th

15、e deal as required under Pennsylvanias law. The majority concern: Conrails management approved the merger, so CSX satisfied the “voting rights statute” to get the right to vote all the shares. Intended to get the support of merger, CSX at least should control 50.1% of Conrails shares. Support partie

16、s are as following:Support Parties%DescriptionConrail Management1.44%Employee Trusts14.36%Reportedly supportFirst stage of Cash offer19.7%34.3%Additional shares needed14.6%Total50.1% CSX decided to require other 20.3% of acquisition shares conservatively in their merger agreement rather than 14.6% b

17、ecause employee trusts are reportedly supported the merger.(ii)Back-end offer (remaining 60% of acquisition shares)After CSX got the majority support of Conrail, parties in support of the merger would vote in favor of opting-out for merger to pass and execute the back-end offer for the remaining Con

18、rails shares. CSX can use stock offer to complete this stage and cost less than using cash. After the STBs approval, the second-end offer would be completed. (d)The final outcome of this acquisition: The front-end offer: 40% of shares (cash tender offer) (i)The first stage: 19.7% of shares (ii)The s

19、econd stage: 20.3% of shares The back-end offer: 60% of shares (stock offer)(2)(a)Fair value statute:此條規定說明，如有收購者擁有目標公司超過20%的股權，往後再收購其他股東股票時，每股價格須和之前的價格同等，除非目標公司的股東投票同意不行使此項規定。此法規應是爲避免少數股東為求自己利益，而將公司的控制權以不合理的價格私相授與收購者。(b)Voting rights statute:不管收購者實際的股權比例多少，而限制其投票權最高為20%，除非股東投票同意其得以按股權比例計算投票權。此爲避免收購

20、者以惡意收購的手段，做出不利於其他股東的決議。(c)Constituency statute: 規定CSX要保護Conrail員工、股東、社會的福利，工會的因素尤為重要，在合併消息宣布時，有近90%的員工尚未表態。(d)Break-up fee:此協議是如果合併的交易沒有完成Conrail須賠償CSX三億美元，在1990年代這種協議十分普遍，一般來說金額約佔總交易額數13%。此應是為了彌補收購者損失，如先前可能已支付的相關併購費用。(e)Lock-up options: 即目標公司提供收購者以一定價格購買到一定數額未來新發行股份的選擇權，一般來說是佔目標公司股本擴大後的10%20%。其用意是防

21、止其他競爭者的出現，確保收購者在股權競爭上有一定的優勢。在這個Case裡面Conrail就保證CSX有以每股$92.5元購買15.96 million股的選擇權。(f)Poison pill: 假如目標公司要避免被收購或接管，他們可以發行大量的新股給原始股東以折扣價格認購，如此不僅稀釋掉競標者的持份比例，也可達到財富移轉的功能。以本例來說，如果有任一家公司收購Conrail股份達到10%的情況下，Conrail有權以50%折扣的價格發行新股給原始股東認購。(g)No talk clause: 此例來說，Conrail跟CSX協議Conrail在合併消息公佈後的六個月內禁止與其他公司商議有關併購

22、的議題，即禁止Conrail尋求其他競標者。但如果Conrail要終止合併協議，有以下方法： (a)Conrail有所謂的classified board，佔全部董事的三分之一，這些董事是唯一 經過每年選舉產生的，只要董事會同意動用anti-takeover law，則即使這些董事改選後，此決議仍然有效。 (b)如果在其他競標者的競爭下，CSX無法完成併購或是無法通過十一月中opt-out的投票，則Conrail也得終止合併協定。(h)總評:這些法規目的在於促進和保護競爭，其最終目的是優化配置資源，保護社會大眾，推動社會福利。並不是要限制生產者和經營者在市場活動中的自由，而是通過限制和阻止市場

23、勢力和反對不正當的市場行為，以維護和擴大經營者在市場活動中的自由權利，排除進入市場的障礙。3. As a Conrail shareholder, would you tender your shares to CSX at $92.50 in the first-stage offer?Ans:If CSX succeeded(1)以$92.5繼續second stage offer(2)以1.85619:1(CSX: Conrail )參加換股If CSX failed(1)賣給Norfolk(2)可能Norfolk亦放棄併購，股價慘跌v若第一階段放棄$92.5的cash tender o

24、ffer： (1)Simulation I：CSX第一階段成功收購19.7%： 若股東選擇參加換股：需承受未來CSX股價波動的風險以Binomial Tree Analysis來分析，假設：a. S0=$46.75b. 未來股價漲跌幅均為20%c. 無風險利率為5.55% (1-year treasury notes interest rate)Su=56.146.75 Sd=37.4上漲機率 P=63.875%，下跌機率(1-P)=36.125 %則持有該股票一年後的股價估計=56.1*63.875%+37.4*36.125%=49.35換股後的價值為$49.35*1.85619 = $91

25、.6報酬率= 7.6%(2)Simulation II：若CSX收購失敗，股東雖可選擇賣給Norfolk(此為不確定因素)，但市場價格亦可能因CSX及Norfolk皆放棄併購而下跌。假設:a. So=$85.13b. 未來股價漲跌幅均為20%c. 無風險利率為5.55%(1-year treasury notes interest rate)Su=102.15685.13Sd=68.104上漲機率 P= = 63.875%，下跌機率(1-P)=36.125%則持有該股票一年後的股價=$102.156*63.875%+68.104*36.125% = $89.85報酬率為= 5.5%(3)購併消息公佈後，Conrail股價上漲至$85.13，故股東選擇cash tender offer的 報酬率為8.7% ()。茲以簡單賽局理論分析如下：Me (小股東)TenderNot