Evaluation of the proposal
Benefits
There are a number of benefits to the proposed merger.
Firstly, Rotomyne and Lithdig are both large operators in the lithium mining industry; indeed, they make up two of the top four largest lithium producing companies, accounting collectively for more than 50% of global sales of lithium by value. This would suggest that, individually, both companies already possess a degree of market power by virtue of their size. This could be expected to increase markedly if the two entities were to merge. They would most likely become the single largest company in the lithium mining sector, which should produce economies of scale in some way.
For example, there may be increased supplier power brought about by the merger. At present, those organisations that look to buy lithium have a certain number of suppliers to choose from. A merger between two of the biggest suppliers in the sector would reduce the options open to buyers; in effect, there would be one less supplier in the market. This might have a favourable impact on the price of lithium on the world commodity markets, which would in turn be of benefit to lithium mining companies. Selling price per tonne, and therefore overall profit margins, would increase.
Secondly, the two companies are similar in size, suggesting that they would be partners of equals in a merger transaction. This would indicate that the term merger is being appropriately used, and accurately describes the combining of Rotomyne and Lithdig. In many instances, the term merger may be used less accurately - if the two organisations are not of equal size, the transaction is more of a takeover in reality. One organisation enjoying much bigger size than the other indicates that the deal is, in reality, one taking control of the other, but the term merger is still used because it has a softer perception in the eyes of the market. In the instance, where Rotomyne has 9 mines to Lithdig’s 10, and the 2024 results and position being very similar, it feels as though the term merger is being used correctly to describe this transaction.
Thirdly, both companies are in the same industry, namely lithium mining, and so both Boards will have complete understanding of the wider business issues that each party faces. This should mean that the two Boards are more confident in accurately identifying where value can be created via a merger. In instances where companies get together which are not so similar in background, the decision makers may hope that value can be created but, with the passage of time once the deal has been done, the benefits don’t actually materialise.
Finally, both Rotomyne and Lithdig are based in Porrland. This means that they are both subject to the same laws and regulations, both converse in the same language, operate in the same time zone etc. This makes doing as deal so much simpler than when the two entities are in different countries. In particular, being subject to the same laws (competition, contract, HR and so on) should lead to a smooth transaction being possible, and so result in the merger being completed quicker than might otherwise be the case.
Risks
There are also a number of risks associated with the proposal.
Firstly ,a merger between Rotomyne and Lithdig doesn’t address the fundamental issue that both companies currently face, namely the volatile price of lithium. As Indira Singh acknowledges, the share price of Lithdig has mirrored that of Rotomyne, and is largely due to the price of lithium on world markets. The announcements recently by electric vehicle (EV) manufacturers of reduced production targets indicates lower demand for lithium, so all mining companies will be affected. It can therefore be argued that a merger is not addressing the fundamental issue impacting the whole industry; just because two large players combine does not mean that demand conditions will change. A merged entity is likely to see its share price affected by exactly the same forces as Rotomyne and Lithdig are currently facing.
Secondly, whilst mention is made of economies of scale in the analysis above, it is difficult to see where these might come from in terms of costs. A combined entity would have 19 mines, all of which would presumably be retained and continue to run as separate operations, so there is little scope for cost saving there. Each would also require its processing plant to continue, as it makes more commercial sense to process on site rather than transport mined product to a central plant for processing. So no further scope for cost savings in processing.
The only real possibility for cost savings might be in administrative roles at Head Office - for example, in human resources, marketing, finance etc. A combined entity would not need to retain two complete sets of staff in such areas. There could also be savings in premises; both companies currently have a Head Office in Porrland, and one of these could be released post-merger, meaning savings in lease costs.
There would also be possible savings through redundancies at the highest level of management i.e. the Board. A merged entity would not need two CEOs, for example. Indeed, this may be seen as a personal reason for all of the current directors not to pursue a merger with Lithdig, fear for their own job security. However, the primary consideration should always be that of looking after shareholder value, and personal issues should not be taken into account in deciding whether to vote for or against a merger.
Thirdly, there may be strong cultural differences between Rotomyne and Lithdig which would take considerable time to resolve post-merger, and so potentially disrupt the operations of the new company and prevent it from realising the gains that had been anticipated. Just because two companies operate in the same sector does not mean that they are similar places to work at. Management styles may be very different, expectations of staff (e.g. being in the office full time versus some hybrid working), rates of pay etc - all of this would need to be considered in the long term and a decision on the best approach to adopt. Inevitably this would then mean change for some staff, which would need careful managing.
For example, there is already a clear difference between the two companies in respect of dividend policy. In 2024, Rotomyne paid out 89.5% of its profit for the year as a dividend to shareholders, whereas the equivalent payout at Lithdig was just 49.6% of profit. The new Board, made up of members of the two previous independent companies, would need to agree on a suitable dividend policy going forwards.
Finally, there is a risk that the Competition Authorities might block any merger proposal between Rotomyne and Lithdig, on the grounds that such a deal would not be in the public interest. As pointed out above, these are two of the biggest companies in the lithium mining industry; a merger might be seen as creating too much power in one company’s hands, and so against the interests of customers and other operators in the lithium market. This would mean that all of the efforts, time and expense (lawyers, financial advisors etc.) that goes into negotiating a deal ends up being wasted.
Preliminary conclusion
It is clear that there are a number of benefits to a merger between Rotomyne and Lithdig, but also some significant risks. The decision is far from clear-cut, and greater time will need to be invested in considering the implications before a final decision can be made. However, it is worth meeting up with Indhira Singh to learn more details of Lithdig’s proposals.
Valuation of the merged entity
When two companies merge, the shareholders of the two individual companies become shareholders in the combined entity. The proportions of shares held in the new entity (e.g. 50:50 or some other ratio) is decided by the respective equity valuations that the two individual entities bring to the combination. So it is critical from the point of view of Rotomyne’s shareholders that the equity value of Rotomyne is as high as possible at the time of the merger.
I have explained below some of the ways that the equity values could be estimated.
Methods of valuation
Market capitalisation
Rotomyne is a listed company and according to Indhira Singh’s email, Lithdig is also listed on the Porrland Stock Exchange. Therefore, the market capitalisations (stock market values) of the two companies would seem at first glance to be the fairest, market-driven representation of the relative values.
However, Rotomyne’s share price has been very volatile recently (it has fallen from approximately P$ 27 in mid-2023 to P$ 7.50 today) and Indhira Singh notes that Lithdig’s share price has also collapsed in a similar way over the last 15 months. This could be purely due to the global price of lithium, but there could be other reasons too affecting the share price in one or both companies, such as the quality of management, brand recognition, quality of products and processes etc.
More analysis needs to be undertaken of both companies’ performance and prospects before a final equity valuation is identified for the purposes of the merger.
Net asset valuations
The lithium mining industry is a capital-intensive industry, so both companies have a significant amount of value sitting in the tangible assets on the statement of financial position. Therefore, in this case a valuation based on net assets could be a sensible way to value Rotomyne and Lithdig for the purposes of the merger.
The main problem with a net assets valuation is that it ignores intangible factors such as brand name, customer service levels, and quality of management.
Discounted cash flow (DCF) valuations
The most common (and theoretically accurate) way of estimating the value of a company’s equity is to forecast its likely free cash flows and discount them at a suitable cost of capital. Valuing both Rotomyne and Lithdig using a DCF approach would be a good starting point as we enter the merger negotiations.
However, given the market volatility in recent years, the cash flows could be quite difficult to estimate accurately. Also, should we use the same cost of capital for both companies, or do they face different risks and hence have different costs of capital?
On the positive side, DCF valuations would enable us to consider the likely synergies that would arise as a consequence of the merger, as well as the cash flows of the two companies as independent entities, so would give a better idea of the likely total equity value of the post-merger company.
Recent industry analysis
Given the volatility in the lithium mining industry in recent times, there could have been other recent examples of mergers and acquisitions that Rotomyne and Lithdig can look at and learn from.
If we can find other recent examples of mergers, we could use information from those mergers to help us to value our merged entity. For example, if a recent merger of two companies has seen combined profits rise, and/or the price -earnings ratio of the combination to increase, we could assume that the same will happen when merging Rotomyne and Lithdig.
How to proceed
Before entering negotiations, the two companies should prepare valuations based on all the different methods explained above. The natural inclination in these valuations is that Rotomyne’s directors will attempt to present a valuation of Rotomyne that is as high as possible, and that Lithdig’s directors will do the same for their company. However, as part of the due diligence procedures in the merger process, these valuations will be independently checked, so any estimates should be backed up by reasonable justifications.
Implications for shareholders
Once an agreement has been reached about how much value each company brings to the merged entity (including their contributions to any synergies that are likely to be created), the ratio of shares to be held by the Rotomyne shareholders and the Lithdig shareholders can be determined.
Rotomyne’s directors have an obligation to maximise the wealth of the Rotomyne shareholders, so they should negotiate hard to ensure that Rotomyne’s share of the combined entity’s shares is as high as possible.
Many marine organisms rely on their ability to hear for their survival. Sound is a
highly efficient means of communication underwater and is the primary way that many
marine species gather and understand information about their environment. Many
aquatic animals use sound to find prey locate mates and offspring avoid predators
guide their navigation and locate habitat as well as to listen and communicate with
each other. Oceans are full of sound. Waves, earthquakes and icebergs - all
contribute to the underwater soundscape. But so do human activities and this can be
a problem for marine life as it can seriously affect their physiology behaviour,
reproduction and even survival. Being able to produce and detect sound in an
environment where light penetrates only a few hundred metres is crucial for animals
to communicate, feed, avoid predators and navigate vast underwater habitats. Large
whales generate low frequency communication calls that can travel thousands of
kilometres. While the snapping shrimp, native to the western Atlantic, can produce
a loud snapping sound capable of stunning and killing its prey. The noise generated
by humans changes the natural acoustic environment of our oceans and our capacity
to produce it is increasing. Noise is often the unintentional by product of
transport infrastructure development and industry. Yet noise can also be produced
deliberately. Many navies use sonar system to detect ships and submarines while
geologists survey the seabed for oil and gas using seismic airguns. The noise
produced by an airgun can exceed 200 decibels louder than a gunshot at a range of
one metre. Sound travels further and four times faster in water than in air at a
speed of almost 1500 metres per second. The noise produced by humans can therefore
spread considerable distances underwater. These sounds can be relatively constant
such as the noise produced by the engine of a ship and propeller or sudden and
acute in the case of naval sonar and seismic airguns.
Linear search is more efficient than binary search when the dataset is small or when the number of searches is very low. This is because linear search does not require the data to be sorted, making it faster for quick, simple searches.
Binary search is better for large, sorted datasets because it divides the search space in half with each step. However, for unsorted data, binary search is not usable without sorting first, which takes time.
In situations where the dataset is small or unsorted, linear search is a good choice because it simply checks each item one by one without requiring extra setup.
In matters of principle, stand like a rock; in matters of taste, swim with the current. Give up money, give up fame, give up science, give up earth itself and all it contains, rather than do an immoral act. And never suppose that in any situation, or under any circumstances, it is best for you to do a dishonorable thing. Whenever you are to do a thing, though it can never be known but to yourself, ask yourself how you would act were all the world looking at you, and act accordingly.
Duty, honor, country: Those three hallowed words reverently dictate what you ought to be, what you can be, what you will be. They are your rallying point to build courage when courage seems to fail, to regain faith when there seems to be little cause for faith, to create hope when hope becomes forlorn.
When questioned, should I become a prisoner of war, I am required to give name, rank, Service number, and date of birth. I will evade answering further questions to the utmost of my ability. I will make no oral or written statements disloyal to my country and its allies or harmful to their cause.
I will never forget that I am an American, fighting for freedom, responsible for my actions, and dedicated to the principles which made my country free. I will trust in my God and in the United States of America.
Defamation is the publishing of a defamatory statement to a third party that causes loss to the plaintiff's reputation. When that plaintiff is a public official, the plaintiff must also prove that the statement is false and that the defendant acted with actual malice. Actual malice is defined as knowing or acting with reckless disregard for the truth.
Dual disc clutches are a high-performance clutch system for manual transmissions that can literally double the torque capacity of your vehicle compared to a single disc system. They work by using two friction discs instead of one, which allows them to handle more torque, more heat and last significantly longer.
Many people believe that television programs are of no value for children. Do you agree? Why or why not?
Model Answer:
Televisual media has become a pervasive force in the lives of families around the world today. Yet, a central question remains regarding whether watching television is harmful or beneficial for children. An analysis of this question reveals that television programs present three major concerns in the case of children, including depictions of violence, the use of profane language, and the representation of poor moral role models.
Television programs that portray violence are a paramount concern for parents nowadays. Recent research has shown that children may commit acts of violence because they wish to emulate the behavior that they see on television. This is especially true when violent acts are committed by well-known action “heroes.” In addition, television programs show cartoon figures, as well as actors, committing violent acts. Using comic situations to depict violent themes causes further problems with the way in which young people view violence.
Television programs that contain profane or disrespectful language also worry parents with young children. Because censorship laws have relaxed over the past few decades, it has become very common for television programs of each and every kind to show characters expressing impolite, rude, and insulting utterances to one another. Bearing resemblance to the case of portrayals of violence, children unfortunately often try to imitate these actions they watch on their television screens.
Finally, some parents are upset about the moral behavior depicted on television. As they struggle to teach their children moral and ethical values, parents might despair about the lack of morals and ethics represented in some of the so-called role models on television. For instance, certain characters not only have no remorse for their immoral actions, but also frequently go unpunished by larger society.
Because of these factors, many parents believe that television programs send their youth the wrong kinds of messages. The emulation of this poor behavior by their children is something they wish to avoid at all costs, and they have accordingly decided to ban television in their households for these reasons.
Television has had a significant influence on the culture of many societies. To what extent would you say that television has positively or negatively affected the cultural development of your society?
Model Answer:
It has been around forty years since television was first introduced into Australian households and people today still have mixed views on whether it has a positive or a negative influence on the society.
Many people believe that television damages culture. It promotes the stronger cultures of countries such as Britain and North America and weakens the cultures of less wealthy countries. This is because the stronger, wealthier countries are able to assert their own culture by producing more programs that are shown widely around the world. These programs then influence people, particularly young people, in the countries where they are shown.
Also, because television networks need to attract large audiences to secure their financial survival, they must produce programs which are interesting to a broad range of people. In Australia this range is very broad because we are a multicultural society and people of all ages like to watch television. To interest all these different people, most television programs are short in length, full of action and excitement, do not require much intelligence or knowledge to understand, and follow universal themes common to all cultures, such as love and crime. Television programs which concentrate on or develop themes pertinent to one particular culture are not so successful because they interest a smaller audience.
Nevertheless we much acknowledge that television does have some positive effects on the cultures within a society as well. People who do not live within their own culture can, in a limited way, access it through the multicultural station on the television. For example, Aboriginal children who have grown up in white families, or migrants and international students living in Australia, can watch programs from their own culture on the television.
In conclusion, I hold the view that television promotes and strengthens those cultures that are wealthy and influential while it weakens the cultures that are already in a weakened position.
The Emperor shall be the symbol of the State and of the unity of the people, deriving his position from the will of the people with whom resides sovereign power.
The Imperial Throne shall be dynastic and succeeded to in accordance with the Imperial House Law passed by the Diet.
Suppose your family owns a plot of land and there is no fencing
around it. Your neighbour decides one day to fence off his land. After he
has fenced his land, you discover that a part of your family’s land has
been enclosed by his fence. How will you prove to your neighbour that
he has tried to encroach on your land? Your first step may be to seek the
help of the village elders to sort out the difference in boundaries. But,
suppose opinion is divided among the elders. Some feel you are right
and others feel your neighbour is right. What can you do? Your only
option is to find a way of establishing your claim for the boundaries of
your land that is acceptable to all. For example, a government approved
survey map of your village can be used, if necessary in a court of law, to
prove (claim) that you are correct and your neighbour is wrong.
Let us look at another situation. Suppose your mother has paid the
electricity bill of your house for the month of August, 2005. The bill for
September, 2005, however, claims that the bill for August has not been
paid. How will you disprove the claim made by the electricity
department? You will have to produce a receipt proving that your
August bill has been paid.
You have just seen some examples that show that in our daily life
we are often called upon to prove that a certain statement or claim is true
or false. However, we also accept many statements without bothering to
prove them. But, in mathematics we only accept a statement as true or
false (except for some axioms) if it has been proved to be so, according
to the logic of mathematics.
In fact, proofs in mathematics have been in existence for
thousands of years, and they are central to any branch of mathematics.
The first known proof is believed to have been given by the Greek
philosopher and mathematician Thales. While mathematics was central
to many ancient civilisations like Mesopotamia, Egypt, China and India,
there is no clear evidence that they used proofs the way we do today.
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Subsequent Remedial Measures
General Rule: Post accident repairs, design changes, policy changes are inadmissible for the purpose of proving negligence, culpable conduct, product defect, or need for warning.
Exception: Subsequent remedial measures may be admissible for:
a) Proof of ownership/control, if disputed by D
b) Feasibility of safer condition, if disputed by D
Liability Insurance
General Rule: Evidence that a person has liability insurance is inadmissible for the purpose of proving fault or the absence of fault
Exception: Evidence of insurance may be admissible:
a) Proof of ownership/control of instrumentality or location if that issue is disputed by D
b) For the purpose of impeachment
Evidence as to how others in the same trade or industry have acted in the recent past may be admitted as some evidence as to how a party in the instant litigation should have acted evidence of the appropriate standard of care
Evidence as to how others in the same trade or industry have acted in the recent past may be admitted as some evidence as to how a party in the instant litigation should have actedevidence of the appropriate standard of care
Habit of a person or routine of a business organization is admissible as circumstantial evidence of how the person or business acted on the occasion at issue in the litigation.
1) Frequency of the conduct
2) Particularity of the conduct
Prior similar conduct of a person may be admissible to raise an inference of the person’s intent on a later occasion (e.g. gender discrimination in a firm) Selling price of other property of similar type, in same general location, and close in time to period at issue, is some evidence of value of property at issue
General Rule: Other accidents involving D are inadmissible because they suggest nothing more than general character for carelessness
Exception: Other accident’s involving the same instrumentality or condition may be admitted for 3 potential purposes, any ONE would suffice:
a) To show the existence of dangerous condition
b) To show causation of the accident
c) Prior notice to the D
Same rule applies to experiments and test
General Rule: Other accidents involving D are inadmissible because they suggest nothing more than general character for carelessness
Exception: Other accident’s involving the same instrumentality or condition may be admitted for 3 potential purposes, any ONE would suffice:
a) To show the existence of dangerous condition
b) To show causation of the accident
c) Prior notice to the D
