In the problem set, we study Volkswagen’s takeover of the Swedish heavy truck and bus manufacturer Scania, a transaction valued at almost SEK 60 billion SEK (EUR 6.5 billion). The transaction was completed, but this was not a certain outcome during most of the process. You can find a lot of information on the process on the internet, but you are encouraged to solve the questions with the information provided before you seek further information. You are provided with five press releases, please read them as instructed below.

1. Merger premium. Read the press release “Volkswagen‐announces‐a‐cash‐offer.” What was the price before the announcement for A and B shares and what is the offered price. Estimate the “merger premium,” and compare this with “deal spread.”

2. Merger event risk. Volkswagen’s offer to purchase all outstanding Scania shares comes with six conditions.

a. For each of these conditions give your subjective estimate of the probability of the condition being met or waived. What is the probability of the transaction being completed?

b. If you worked for an event‐driven investment manager and had more time and resources, what kind of information or research do you think is most valuable in this type of merger?

Answer rating: 100% (QA)

1 The price before the announcement for A and B shares was SEK 25380 and SEK 26550 respectively The ... View the full answer