The Vietnamese culture Essays

The Vietnamese culture Essays The Vietnamese culture Essay The Vietnamese culture Essay However, following Watson and Head, 2007, and Singh 1971, in practice, it is the market price of the share that determines the PE ratio. This is only the guide to company performance on the paper, since it uses the historical numbers and it ignores both cash flow and risks. The last one is the managerial motives. Takeover can arise because of the agency problem where conflicts of interest between shareholders and managers. In my opinion I think that it is difficult to give the example for this, because it seems like an internal issue inside the company, and as I presented, keeping information is part of the Vietnamese culture. Therefore, after taking over, the larger their firm, the less likely it is to be taken by the others, so the more secure for the job of managers. However, everything has two sides. Now the researcher will present about the against-acquisition aspect, why the firm may not choose takeover as the solution. Because Jebb plc is going to take over the rival, assuming they are in the same industry car producer, the target rival company can go to the court to ask for stopping the takeover when it leads to monopoly or it affects the fair competition, according to the Competition commission referral 1999. For instance, Jebb plc and B ltd are two biggest car producer companies in Hanoi and in Hochiminh city. When Jebb plc buys B, it will affect the price of products, the services serving to the customers, the distribution area, and it might lead to the monopoly market. Therefore, it will damages image and wealth of B, and it is not a good new for another car producer in Vietnam. Besides, when the number of shares increase through issuing new shares, it is harder to gain majority. Also if after acquisition, the bidder only has 49% of shares, then it is still no authority on running business, and is considered as useless action. Hence, Jebb plc will be in big trouble, and it will make the bridge turning 180 degree around, when B ltd can threaten against Jebb. For more understanding about the theories, please refer to the appendix 1 where the researcher presented about the basic theories of reasons profits behind takeovers, and against takeover. With the assumption as above, we now move to the method for Jebb plc to take over B. Based on the assumption above, we choose the horizontal acquisition, and we will finance it by cash offers mixed with share-for-share offer, because it will be attractive to the target firm shareholders, due to the reasons that compensation they receive for their share is surely in value. Also, it will retain equity interest, no broker costs from re-investing cash and reducing capital gain tax liability (Watson and Head, 2007). Besides, if we do not have cash in hand, and the new issue is rejected, we can issue the right issue, or borrow the issue bonds before we borrow from the bank. However, after acquisition, we will have problems with the interest rate (liquidity problem), gearing, and may be changes in capital structure among with the impacts on employees, managers on top, shareholders for both Jebb plc and B ltd (please refer to the appendix 1). When we borrow money, we must pay the interest, so the expenses will be increased, the profit goes down, the share price goes down, then the market value goes down, and this will lead to the company performance. The figure 1 and figure 2 in the appendix 1 will show for more detail.