Global Financial Market (October 2015)
Coursework Brief and Case Study
Read the news announcement SABMiller and AB InBev agreement in principle and extension of PUSU deadline from SABMiller website (enclosed 7 page case study) to perform the following tasks of analysis and write up your finding in a report format.
You are encouraged to conduct research on the effects of the news on share price. All related regulatory announcements can be found (as of Wednesday 14 October 2015) at the following website: https://www.sabmiller.com/investors/ABInBev-Possible-Offer
This is an ongoing case of AB InBev, one of the biggest in the UK. The study should emphasize the state of the play, valuation and trading strategy going forward. The students are encouraged to take a forward looking view on the future of acquisition event.
Conduct in-depth background research to enhance the analysis of the acquisition event. Such research should demonstrate in-depth understanding on the working of the sector. You should set up a timeline to reflect the chronicle of events based on key dates. (20%)
Conduct comprehensive valuation on SABMiller and AB InBev prior to the acquisition announcement. Your valuation should use relevant valuation technique(s) to arrive at an appropriately discounted present value (per share) for SABMiller and AB InBev. (20%)
Evaluate the extent of price impacts on SABMiller and AB InBev following the news announcements on acquisition. Does the movement of share price reflect the insights from Efficient Market Hypothesis (EMH)? (20%)
Conduct event analysis to test EMH and derive your trading profit from the event. An event analysis template is provided separately based on Chapter 14 contents of Simon Benninga textbook Financial Modelling (4th edition). (20%)
You are required to demonstrate trading strategies and instruments that would be appropriate to exploit price efficiency/inefficiency during the process of acquisition. Your analysis should forecast possible trading profit going forward. (20%Timeline
The first announcement event occurred on 16 September 2015 and the cut-off time is 30 November 2015. Respectively, your estimation window* should run at least one year before the event announcement date, e.g. 15 September 2014 and your event window should have a cut-off date by 30 November 2015. You can also simulate price behaviours of both companies going forward.
*See Chapter 14 Simon Benningas textbook for the definition of estimation window.
Organize your findings in a Report format according to the weight presented. The length should be no longer than 2,500 words. You need to provide data and valuation result in Excel format as evidence in the appendix.
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