Question

US pharmaceutical company Merck announced the acquisition of Acceleron Pharma Inc. on 30th September 2021 for $11.5 billion. The deal was completed on 22nd  November 2021.

Further details

1)           Provide background information for Merck and Acceleron prior to the acquisition announcement year. You may provide various information, but focus should be given on the financial background of the two firms. [10 marks]

2)           Discuss potential reasons that led the management of Merck to take the decision to acquire Acceleron. Support your arguments with appropriate evidence from published sources or  information provided by the two firms. [20 marks]

3)           Estimate the market reaction for Merck around the acquisition announcement date. From the shareholders’ perspective of the two firms, can the deal be considered successful? Also, estimate the share price reaction of Acceleron prior to and around the acquisition announcement. Discuss your findings. [20 marks]

4)           If you were the financial advisor for Merck, how much would you advise the management of Merck to pay for the acquisition? Estimate the value of Acceleron in the year prior to the acquisition announcement using at least two valuation methods, one of which should be the DCF method. Clearly demonstrate assumptions, calculations, scenarios and data sources. [30 marks]

5)           Compare the estimated value of Acceleron as estimated in the previous sub-section with the DCF method with its market value on the announcement date. Discuss potential reasons and explanations for the actual payment by Merck. [20 marks]

Provide evidence from the literature where appropriate to support your arguments and views.

Coursework Rubric

A holistic rubric provides a list of assessment criteria together with broad description of the characteristics that would be expected for each level of performance.

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Document creation

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•    Use a Sans Serif font in black, e.g., Arial, Avant Garde, Calibri, Helvetica and Geneva.

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•    Align your text to the left margin.

•    Add page numbers.

Referencing and bibliography

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In the text, use the following referencing conventions:

•    Smith (1999) argues that… . or

•    It has been argued that…… . (Smith, 1999).

•    If you use a direct quote, use quotation marks and cite the page number as well as the author and date, i.e. (Smith, 1999, p. 4).

•    If you have two items by the same author in the same year, refer to one as ‘a’ and the other as ‘b,’ i.e., Smith (1999a) and Smith (1999b).

For more information, please refer to theUniversity Library webpage.

Student conduct

Plagiarism

You must adhere to the University’s rules regarding plagiarism which are based on the premise      that ‘all work submitted by students for assessment is accepted on the understanding that it is the student's own effort’ .  More specifically, you must avoid plagiarism in the following forms:

•    Copying from sources without ‘formal and proper acknowledgement’

•    Inappropriate collaboration – working with other students to produce individual coursework or copying work produced by another student

•    Submitting work which you have obtained from another source, e.g., an essay mill

•    Self-plagiarism – basing coursework on work that has already been submitted for assessment purposes.

For advice and more information, please consult:

•   LEADS web pages

•   University Plagiarism Statement

Turnitin

Note that your coursework will be processed through Turnitin for similarity checking. You can submit a draft of your coursework to Turnitin before submitting your final copy. You will find information      about using Turnitin in the Student Information Point Moodle.

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Finalising your document

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1.    Check your spelling and grammar using the inbuilt tool on your device. You will not be penalised for grammatical and spelling errors but we recommend that you take the     opportunity to correct them.

2.    Check your file name (see above).

3.    Check that you have used an accepted file type (see above).

4.    Do not include your name in the file name or the document to support anonymous marking.

Uploading your document to Moodle

1.   You will upload your document to the designated section of the Moodle course, which will be clearly signposted.

2.   Try to upload your document at least 30 minutes before the deadline (page 1) in case you encounter any technical issues. You will be able to resubmit the document as often as you like until the submission deadline.

3.    Complete the Declaration of Originality (see below).

Declaration of Originality

When you upload your coursework on Moodle, you will be required to select a checkbox to confirm that you agree with the University’s Declaration of Originality which applies to all academic work, as follows.

I confirm that this assignment is my own work and I have:

•    Read and understood the guidance on plagiarism provided on the Student Information Point Moodle course including the University of Glasgow Statement on Plagiarism.

•    Clearly referenced, in both the text and the bibliography or references, all sources used in the work.

•    Fully referenced (including page numbers) and used inverted commas for all text quoted from books, journals, web etc.

•    Provided the sources for all tables, figures, data etc. that are not my own work.

•    Not made use of the work of any other student(s) past or present without acknowledgement. This includes any of my own work, that has previously, or concurrently, been submitted for assessment, either at this or any other institution, including school.

•    Not sought or used the services of any professional agencies to produce this work.

•    In addition, I understand that any false claim in respect of this work will result in disciplinary action in accordance with University regulations.