Vivea pharmaceuticals, is a maker of drugs. The company, being a mature one, has a large...

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Vivea pharmaceuticals, is a maker of drugs. The company, being a mature one, has a large taxxable income, but, its revenues have been increasing very slowly for the past few years. Moreover, the chief executive officer believes that it has become too costly to develop new drugs. Vivea pharmaceuticals is now planning to acquire Fast Health Inc., a distributor of drugs to hospitals. Fast Health Inc. is a rapidly growing company and has huge tax losses on its balance sheet. Vivea pharmaceuticals is confident in the estimates of synergies resulting from the merger and believes that the valuation of Fast Health Inc. is very accurate. Fast Health Inc. would also feels that the merger will be extremely beneficial. After the merger, the companies announce that a new company called Vivea Health is being formed from the assets of the combined companies. a) b) c) Based on the information given, list and explain 3 motivations behind this merger. Two methods of payments are available for the merger: a security offering or a cash offering. Critically assess which method of payment would be preferred by (i) Vivea pharmaceuticals (ii) Fast Health Inc.? What is the form of integration and type of merger in this transaction? Vivea pharmaceuticals, is a maker of drugs. The company, being a mature one, has a large taxxable income, but, its revenues have been increasing very slowly for the past few years. Moreover, the chief executive officer believes that it has become too costly to develop new drugs. Vivea pharmaceuticals is now planning to acquire Fast Health Inc., a distributor of drugs to hospitals. Fast Health Inc. is a rapidly growing company and has huge tax losses on its balance sheet. Vivea pharmaceuticals is confident in the estimates of synergies resulting from the merger and believes that the valuation of Fast Health Inc. is very accurate. Fast Health Inc. would also feels that the merger will be extremely beneficial. After the merger, the companies announce that a new company called Vivea Health is being formed from the assets of the combined companies. a) b) c) Based on the information given, list and explain 3 motivations behind this merger. Two methods of payments are available for the merger: a security offering or a cash offering. Critically assess which method of payment would be preferred by (i) Vivea pharmaceuticals (ii) Fast Health Inc.? What is the form of integration and type of merger in this transaction?

Answer rating: 100% (QA)

A Three motivations behind this merger include 1 Tax Benefits Fast Health Inc has large tax losses o... View the full answer