Today's date is 1st August 2021. Soft Bank from Japan made an acquisition of one Malaysian digital banking via the equity market (Malaysia stock exchange) on 30th August 2021. The targeted price for the digital bank was Rm 5, which currently is sold at Rm3. The enterprise value of that Malaysian digital bank is Rm 450 million with fully diluted outstanding shares of 100 million shares. Many analysts argue that the price of Malaysian Digital Bank should be around Rm 3.5.

(i)  Analyze the theoretical motives in explaining Soft Bank’s acquisition move on the Malaysian Digital Bank.
[2 Marks]

(ii)  The shareholders of Soft bank have doubts about the valuation method and think it is overvalued. What the Soft Bank’s management should provide to convince the shareholders’ related to this valuation doubtfulness? Explain briefly
[2 Marks]

(iii)   If 10 days after acquisition, the digital bank’s stock price drops to Rm 4, Interpret the drops of the price from the perspective of M&A activities. What does it mean for Soft Bank’s management? Explain briefly
[2 Marks]

(iv)  If 10-day pre-acquisition, the analyst finds that there is different accounting standard between Japan and Malaysia accounting standard. The analysis just realized that the investment in cryptocurrency by Malaysia digital bank should be recognized as digital assets not as revenue structure. It leads to decreasing revenue stream. What will happen to the targeted price of Soft Bank? Explain briefly
(2 Marks)

(v)  Why culture is an important synergy factor for Merger & Acquisition? Elaborate your answer from post-merger integration perspective.
(2 Marks)

Answer rating: 100% (QA)

i Theoretical motives explaining Soft Banks acquisition move on the Malaysian Digital Bank can inclu... View the full answer