AfCFTA – NBC Institute

ATAX – May 2021 – L3 – Q3 – Taxation of Mergers and Acquisitions

Explaining acquisitions versus mergers, outlining tax implications for companies, and evaluating AfCFTA's impact on transactions.

Question

The price of crude oil had fallen from over US$100 per barrel in the past few years to under US$40 per barrel recently in the international market. This has resulted in squeezed margins despite efforts to cut costs.

Krude Explora Nigeria Limited, an indigenous oil servicing company operating in the oil and gas sector for 23 years, faces a going concern risk due to falling profitability and liquidity challenges. It is probable that the company will default on its loan facility of US$122.5 million from B2B Energy Bank Plc. If this happens, the company will likely be taken over by Asset Management Corporation of Nigeria (AMCON).

Coincidentally, Wakanda Oil Exploration Limited, a multinational oil servicing company operating across Africa and the Middle East, has just sent an offer to acquire Krude Explora Nigeria Limited. The proposed acquisition will solve the liquidity problems in the short term, while efficiency and scale from the acquisition will hopefully return the company to profitability.

As the lead tax advisor for the proposed transaction, you are required to:

a. Explain the term “acquisition” as compared to a “merger” and give one example each of a recent merger and acquisition in the Nigerian petroleum industry. (4 Marks)

b. Outline and explain briefly the areas that may have tax implications for:
i. Krude Explora Nigeria Limited (4 Marks)
ii. Wakanda Oil Exploration Limited (4 Marks)

c. Discuss the likely impact of the African Continental Free Trade Area agreement and the local economy on a proposed acquisition or merger. (7 Marks)

Answer

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Tags: Acquisitions, AfCFTA, Mergers, Oil and Gas Taxation, Tax implications
Level: Level 3

Topic: Taxation of Mergers and Acquisitions

SCS – Dec 2022 – L3 – Q4a – Strategy implementation

Evaluate non-financial factors affecting TCWL’s strategic expansion using Johnson and Scholes’ model.

Question

TCWL plans to expand to Kenya and South Africa to produce for Eastern and Southern Africa markets respectively. This move is largely influenced by the Africa Continental Free Trade Agreement (AfCFTA) which was launched in July 2020. This strategic direction would require substantial investments to upgrade production facilities to meet the new market demand.

Required:

Using Johnson and Scholes suitability/feasibility/acceptability model, evaluate the non-financial factors that could influence the success of this strategic decision. (10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: AfCFTA, expansion, Johnson and Scholes, Non-Financial Factors, Strategic Decision-Making
Level: Level 3

Topic: Strategy implementation
Series: DEC 2022

ATAX – May 2021 – L3 – Q3 – Taxation of Mergers and Acquisitions

Explaining acquisitions versus mergers, outlining tax implications for companies, and evaluating AfCFTA's impact on transactions.

Question

As the lead tax advisor for the proposed transaction, you are required to:

a. Explain the term “acquisition” as compared to a “merger” and give one example each of a recent merger and acquisition in the Nigerian petroleum industry. (4 Marks)

b. Outline and explain briefly the areas that may have tax implications for:
i. Krude Explora Nigeria Limited (4 Marks)
ii. Wakanda Oil Exploration Limited (4 Marks)

c. Discuss the likely impact of the African Continental Free Trade Area agreement and the local economy on a proposed acquisition or merger. (7 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Acquisitions, AfCFTA, Mergers, Oil and Gas Taxation, Tax implications
Level: Level 3

Topic: Taxation of Mergers and Acquisitions

SCS – Dec 2022 – L3 – Q4a – Strategy implementation

Evaluate non-financial factors affecting TCWL’s strategic expansion using Johnson and Scholes’ model.

Question

Required:

Using Johnson and Scholes suitability/feasibility/acceptability model, evaluate the non-financial factors that could influence the success of this strategic decision. (10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: AfCFTA, expansion, Johnson and Scholes, Non-Financial Factors, Strategic Decision-Making
Level: Level 3

Topic: Strategy implementation
Series: DEC 2022

Question Tag: AfCFTA

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ATAX – May 2021 – L3 – Q3 – Taxation of Mergers and Acquisitions

Explaining acquisitions versus mergers, outlining tax implications for companies, and evaluating AfCFTA's impact on transactions.

SCS – Dec 2022 – L3 – Q4a – Strategy implementation

Evaluate non-financial factors affecting TCWL’s strategic expansion using Johnson and Scholes’ model.

ATAX – May 2021 – L3 – Q3 – Taxation of Mergers and Acquisitions

Explaining acquisitions versus mergers, outlining tax implications for companies, and evaluating AfCFTA's impact on transactions.

SCS – Dec 2022 – L3 – Q4a – Strategy implementation

Evaluate non-financial factors affecting TCWL’s strategic expansion using Johnson and Scholes’ model.

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Question Tag: AfCFTA

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ATAX – May 2021 – L3 – Q3 – Taxation of Mergers and Acquisitions

Explaining acquisitions versus mergers, outlining tax implications for companies, and evaluating AfCFTA's impact on transactions.

You're reporting an error for "ATAX – May 2021 – L3 – Q3 – Taxation of Mergers and Acquisitions"

SCS – Dec 2022 – L3 – Q4a – Strategy implementation

Evaluate non-financial factors affecting TCWL’s strategic expansion using Johnson and Scholes’ model.

You're reporting an error for "SCS – Dec 2022 – L3 – Q4a – Strategy implementation"

ATAX – May 2021 – L3 – Q3 – Taxation of Mergers and Acquisitions

Explaining acquisitions versus mergers, outlining tax implications for companies, and evaluating AfCFTA's impact on transactions.

You're reporting an error for "ATAX – May 2021 – L3 – Q3 – Taxation of Mergers and Acquisitions"

SCS – Dec 2022 – L3 – Q4a – Strategy implementation

Evaluate non-financial factors affecting TCWL’s strategic expansion using Johnson and Scholes’ model.

You're reporting an error for "SCS – Dec 2022 – L3 – Q4a – Strategy implementation"

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