Spreadsheet for case UV2479

Alfonso Cortina, chair of Repsol-YPF S.A., accepted the award from the Financial Times for the best merger in the energy sector in 1999. The acquisition, which closed on June 28, 1999, boosted the firm's share price despite a strategy of hostile acquisition and significant change in the firm's capital structure.

In April 1999, the CEO of Repsol S.A., the large Spanish oil company, seeks to design the terms of an unsolicited tender offer to the shareholders of Argentina's largest oil company, YPF. The value to be paid per YPF share has been set. Remaining to be decided are: (a) form of payment, and (b) form of financing, if it is to be a cash deal. The task for the student is to sort through the advantages and disadvantages of three financing alternatives, using a framework such as FRICTO, and to make a recommendation. The objectives of this case are to: (1) illustrate the linkage between acquisition price, form of payment, and acquisition financing; (2) exercise analytical frameworks for comparing financing alternatives; (3) consider the important role of synergy expectations in designing financing. The case was prepared for use in an MBA elective on mergers and acquisitions, though could be easily adapted for teaching concepts of corporate financing.