1. Background

Read the news announcement ‘BAT Announces Agreement to Acquire Reynolds’ from BAT  website (enclosed 5 page case study) to perform the following tasks of analysis and write up your finding and research in a report format. You are encouraged to conduct research on the effects of the news on share price and outline your analysis of the event. 

This is an ongoing case of M&A. The study should emphasize the state of the play, valuation and trading strategy going forward. Students are encouraged to take a forward looking view on the future of acquisition event.  All related regulatory announcements can be found on BAT website under: investors/ results and reporting / stock exchange announcement:


2. Objectives

• 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 (see Section 3 below) to reflect the chronicle of events and key dates. (10%) 

• Conduct comprehensive valuation on BAT and Reynolds prior to the acquisition announcement. Your valuation should use relevant valuation technique(s) to arrive at an appropriately discounted present value (per share) for BAT and Reynolds. (20%) 

• Evaluate the extent of price impacts on BAT and Reynolds 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 until the appropriate cut-off date. (20%) 

• Conclusion and Recommendation. Conclude your analysis based on the above analysis and recommend appropriate course of action for trading on this M&A event (10%) 

Organize your findings in a Report format according to the weight presented in Section 2. 

The length should be no longer than 2,500 words. You need to provide data and valuation result in Excel format and as evidences in the appendix. 

Your Excel model also needs to be sent separately to both your module leader and seminar tutor by email so that we verify the details of your model on your submitted paper. 

References and appendixes will not be included in the final word count. 

Coursework Submission Deadline: See Moodle Submission Link

Coursework Weighting: 100% 


5. Key Learning Outcomes 

• Demonstrate knowledge of the purpose and functions of global financial markets

• Analyse the role of financial market data in supporting business decisions 

• Critically evaluate the impact of the global financial markets on the business environment 

• Demonstrate the ability to analyse and present quantitative data to support an argument. 

• Use information technology to analyse and communicate financial data 


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