second lesson 2009 summe

8/14/2019 Second Lesson 2009 Summe

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StructureStructure

The key to The key toclarity and powerclarity and power

in writingin writingOrganizing thoughts intoOrganizing thoughts into

words, sentences andwords, sentences andparagraphsparagraphs


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Business & Finance Writing Summer 2009Business & Finance Writing Summer 2009 22

Words, the atoms of structureWords, the atoms of structure

Verbs and nounsVerbs and nounsConcrete vs abstractConcrete vs abstract

Specific vs vagueSpecific vs vagueSimple vs complicatedSimple vs complicatedFamiliar vs unfamiliarFamiliar vs unfamiliar

Layman's terms vs jargonLayman's terms vs jargon


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Verbs and nounsVerbs and nouns

Strong verbs = strong sentences =Strong verbs = strong sentences =clarityclarity

The Platinum Futures fund The Platinum Futures fundoutperformed bonds.outperformed bonds.

A fund that is composed of PlatinumA fund that is composed of Platinum

futures had performance that wasfutures had performance that wasbetter than bonds.better than bonds.


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NounsNouns

ImportanceImportanceForty billion yen in bonds were soldForty billion yen in bonds were sold

today by Nippon Steel Corp.today by Nippon Steel Corp.

Nippon Steel Corp. sold 40 billion yenin 10-year bonds today.


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Make it concreteMake it concrete

ConcreteConcrete

rainrain

debtdebtmoneymoneycompatiblecompatibleborrowing costsborrowing costs

low pricelow price

AbstractAbstract

weatherweather

leverageleveragefundsfundssynergisticsynergisticinterest ratesinterest rates

cheapcheap


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Concrete makes it simple,Concrete makes it simple,specificspecific

Poor weather may affect ricePoor weather may affect ricefarmers earnings and leverage.farmers earnings and leverage.

Less-than-usual rain may reducefarmers profit and force them toborrow more.


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Building blocks of storyBuilding blocks of story

Dramatic structureDramatic structure

--What, why

--Evidence

--Why we should care

--What may happen in the future


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due diligencedue diligence

Offers to purchase an asset areOffers to purchase an asset areusually dependent on the results of usually dependent on the results of dueduediligence analysis. This includesdiligence analysis. This includesreviewing all financial records plusreviewing all financial records plusanythinganything

else deemed material to the sale.else deemed material to the sale.

Commerzbank AG, Landesbank Baden-Wuerttemberg and DSGV, the savings banks association, handed inoffers for Landesbank Berlin Holding AG, the biggest lender inthe German capital, said three people with knowledge of the sale.

The three banks met today's deadline after conducting duediligence, according to the people, who did not give details and

declined to be identified because the bids are not yet public.


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poison pillpoison pillDescribes a range of tactics used by publicDescribes a range of tactics used by publiccompanies to avoid a hostile takeover.companies to avoid a hostile takeover.

One example is the issuance of a preferredOne example is the issuance of a preferredstock that gives shareholders the right to redeemstock that gives shareholders the right to redeemtheir shares at a premium after the takeover.their shares at a premium after the takeover.A strategy used by corporations to discourageA strategy used by corporations to discouragea hostile takeover by another company. Thea hostile takeover by another company. Thetarget company attempts to make its stock lesstarget company attempts to make its stock lessattractive to the acquirer. There are two types of attractive to the acquirer. There are two types of poison pills:poison pills:

A "flip-in" allows existing shareholdersA "flip-in" allows existing shareholders(except the acquirer) to buy more shares at a(except the acquirer) to buy more shares at adiscount.discount.

The "flip-over" allows stockholders to buy the The "flip-over" allows stockholders to buy theacquirer's shares at a discounted price after theacquirer's shares at a discounted price after the


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Private equityPrivate equity

Private equityPrivate equityEquity capital that is madeEquity capital that is made

available to companies or investors,available to companies or investors,but notbut notquoted on a stock market. The fundsquoted on a stock market. The fundsraised through private equity can beraised through private equity can be

used to develop new products andused to develop new products andtechnologies, to expand workingtechnologies, to expand workingcapital, to makecapital, to make

acquisitions, or to strengthen aacquisitions, or to strengthen a''

Permira, which said it expects the offer to start by Julyand be completed by September, is acting through its Red & BlackLux SARL unit. The private-equity interest in Valentino follows

TowerBrook Capital Partners LP's takeover of shoemaker Jimmy ChooLtd. in February.


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goodwillgoodwillGoodwillGoodwillAn account that can be found in the assetsAn account that can be found in the assetsportion of a company's balance sheet. Goodwillportion of a company's balance sheet. Goodwillcan often arise when one company is purchasedcan often arise when one company is purchased

by another company. Inby another company. Inan acquisition, the amount paid for the companyan acquisition, the amount paid for the companyover book value usually accounts for the targetover book value usually accounts for the targetfirm's intangible assets. Goodwill is seen as anfirm's intangible assets. Goodwill is seen as anintangibleintangible

asset on the balance sheet because it is not aasset on the balance sheet because it is not aphysical asset such as buildings and equipment.physical asset such as buildings and equipment.Goodwill typically reflects the value of intangibleGoodwill typically reflects the value of intangibleassets suchassets suchas a strong brand name, good customer relations,as a strong brand name, good customer relations,good employee relations and any patents orgood employee relations and any patents orro rietar technolo .

The company booked abtout 1.1 trillion yen ($9.4 billion) ingoodwill, or the amount it paid above the market value of Vodafone K.K.'s net assets, from its purchase in April, theNikkei Financial reported, citing Kazuko Kimiwada, Softbank's

accounting manager. Softbank bought Vodafone for 1.8 trillionyen.


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Private equityPrivate equity

Equity capital that is made available toEquity capital that is made available tocompanies or investors, but notcompanies or investors, but notquoted on a stock market. The fundsquoted on a stock market. The funds

raised through private equity can be usedraised through private equity can be usedtotodevelop new products and technologies,develop new products and technologies,

to expand working capital, to maketo expand working capital, to makeacquisitions, or to strengthen a company'sacquisitions, or to strengthen a company'sbalance sheet.balance sheet.


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Book valueBook value

The accounting value of a firm. It has two main The accounting value of a firm. It has two mainuses:uses:1. It is the total value of the company's assets1. It is the total value of the company's assets

that shareholders wouldthat shareholders wouldtheoretically receive if a company weretheoretically receive if a company wereliquidated.liquidated.

2. By being compared to the company's market2. By being compared to the company's market

value, the book value can indicatevalue, the book value can indicatewhether a stock is under- or overpriced.whether a stock is under- or overpriced.


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Takeover bid Takeover bid

When an acquiring company makesWhen an acquiring company makesan offer to the target company'san offer to the target company'sshareholders to buy the targetshareholders to buy the targetcompany's shares in order to gaincompany's shares in order to gaincontrol of the business.control of the business.

Takeover bids can either be friendly Takeover bids can either be friendlyor hostile.or hostile.


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Leveraged buyoutLeveraged buyout

Takeover of a company or controlling Takeover of a company or controllinginterest in a company using ainterest in a company using asignificantsignificantamount of borrowed money, usuallyamount of borrowed money, usually70 percent or more of the total70 percent or more of the totalpurchasepurchase

price.price.


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DiscountDiscount

The amount below the market price The amount below the market priceby which a shareholder is willing toby which a shareholder is willing tosell hissell hisstock, or an investor is willing to offerstock, or an investor is willing to offerfor it.for it.


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PremiumPremium

The amount above the market price The amount above the market priceby which a shareholder is willing toby which a shareholder is willing tosell hissell hisstock, or an investor is willing to offerstock, or an investor is willing to offerfor it.for it.


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Schott acquired Moritex via a takeover bid (TOB) in October 2008.

Schott, the German-based industrial optical fiber maker acquiredMoritex,the Japanese optical fiber maker, in April 2009.

Schott, a Germany-based optical fiber maker, acquired Japanese rival Moritex in April 2009.

When asking about the details of the due-dilligence on this recent TOBdeal,

Schott is attractive to Moritex, given its brand and sales channels, aMoritex source said, adding that Moritex used to have an issue with itsfrequent change of its major shareholders. Thus, Moritex chose alarge-scaled Schott as a stable major shareholder in order tocollaborate onthe optical fiber business , the Moritex source continued.

Schott gains the Moritex brand and distribution, while Moritexexpects the transaction to give it a stable long-term ownership.


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The market cap of Schott is about USD 10bn, but that of Moritex is justabout USD 100m.

Schotts market cap is about USD 10bn, about 100 timesMoritexs USD 100mn.

Schott does not have a strong market share on the machine visionsystem with the components such as optical lenses used for thesemiconductormanufacturing equipment, which would generate a growingdemand as the macro economics recovers, a Schott source said.However, Moritex was a global market leader on this businessspace, which was the main reason of the business partnership withMoritex, leading to the TOB deal, a Schott source said.


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That deal was synergetic and for the both Schott and Moritex, a Japan-based sector analyst covering this sector said. Moritex, as adomestic-based company, would prospect a profit via gaining theglobal saleschannel of Schott on its optical fiber products, he said, adding thatSchottwould enter into the Japan market on its optical fiber businesswhereseveral Japanese players such as Hitachi and Toshiba dominate itsmarket.

The optical fiber is the component such as lenses used for the LEDand thesemiconductor inspection equipment, according to the website of Moritex.


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On 22nd May, USJ, running an amusement parkUniversal Studio Japan in Osaka, presented that atakeover bid was completed by a head of shareholdersSG Investments, a group of Goldman Sachs.

Goldman Sachs Japanese private equity unitacquired Osaka-based Universal Studios Japan onMay 22 to attract more customers by improvingthe amusement parks facilities.

The takeover bid was implemented between 23rd Marchand 21st May. 98.8% of voting shares was made into it.USJ expects to be delisted from Tosho Mothers. GrenKanpel, President of USJ, continues to be the position andlead the company. He will focus on growing a profit, byspending on the companys facilities and attracting largenumber of customers.


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On 19th May, Japan Airport Building presented to implement

share-buy back scheme, limited to 22% (22,000,000 shares)issued stocks. After approval at the shareholders meeting, JABwill start stock buyback through a takeover bid. MacquarieGroup, Australian investment fund, has owned 20% of the shareas a head of shareholders. Macquarie expects to sell off allshares at the takeover bid.


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An amount per sharer is 1,000 yen

and 4% premium more than theclosing price on 19th. The date of

TOB will be from 30th June to 28th

July. The fund of purchasing shareswill be supplemented with their ownfunds and debt payable.


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Macquarie has started to own theshare of JAB since 2007, andacquired 19.9% at the end of Marchin 2008. On the other hand, since JABhas made a measurement against

takeover bids, both have beendeadlocked. According to the reportof the big owners of shareholder,Macquarie will sell off the sharesinvolving a loss at the average shareacquired price 2,289 yen.

second lesson 2009 summe

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