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The objective of this note is to define what is meant by mergers and acquisitions and to understand why they happen. The impact of these deals on shareholders of both the acquiring and acquired companies is investigated, and the reasons why some mergers succeed while others fail are examined. Finally, in order to determine the value of a firm, some valuation frameworks are provided.

Peter Munk, Chairman and Chief Executive Officer of American Barrick Resources Corporation, had to decide whether or not to make a bid for Lac Minerals. Lac Minerals was recently put into play when Royal Oak Mines made an unsolicited bid.

The object is to define what is meant by mergers and acquisitions and to understand why they happen. The impact of these deals on shareholders of both the acquiring and acquired companies is investigated, and the reasons why some mergers succeed while other fail are examined. Finally, in order to determine the value of a firm, some valuation frameworks are provided.