Mergers and Acquisition-A Brief Study

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Information about Mergers and Acquisition-A Brief Study

Published on April 17, 2017

Author: Rvinodkumar2


1. BY :

2. Your company slogan Introduction • With recession taking toll of many Indian businesses and the feeling of insecurity surging over our businessmen, it is not surprising when we hear about the immense numbers of corporate restructurings taking place, especially in the last couple of years. Several companies have been taken over and several have undergone internal restructuring, whereas certain companies in the same field of business have found it beneficial to merge together into one company. •All our daily newspapers are filled with cases of mergers, acquisitions, spin- offs, tender offers & other forms of corporate restructuring. In this context, it would be essential for us to understand what corporate restructuring and mergers are all about.

3. Your company slogan What is Merger ? MERGERMERGER The combination of two or more companies to form a new company. A merger is a transaction that result in the transfer of ownership and control of a corporation. When one company purchases another company of an approximately similar size. The two companies come together to become one. Two companies usually agree to merge when they feel that they can do something together that they can not do one their own. oExample: Company A+ Company B= Company C.

4. Your company slogan Mergers Merger is all about…..

5. Your company slogan TYPES OF MERGER TYPES OF MERGER: •Horizontal Merger •Vertical Merger •Conglomerate Merger •Concentric Merger

6. Your company slogan Horizontal Mergers  Horizontal mergers:Horizontal mergers:  A horizontal merger involves two firms operating and competing in the same kind of business activity.  Textiles firm merges raw materials firm. - Example: Exxon - Mobil

7. Your company slogan Examples of Horizontal Merger •Lipton India and Brooke Bond. •Bank of Mathura with ICICI Bank. •BSES Ltd with Orissa Power Supply Company. •Associated Cement Companies Ltd Damodar Cement.

8. Your company slogan Vertical Mergers  Vertical mergers:Vertical mergers:  Vertical mergers occur between firms in different stages of production operation. - Example: Helene Curtis and Unilever

9. Your company slogan Example of Vertical Merger  Time Warner Incorporated, a major cable operation, and the Turner Corporation, which produces CNN, TBS, and other programming.  Pixar-Disney Merger

10. Your company slogan Conglomerate Mergers  Conglomerate Mergers:Conglomerate Mergers:  Conglomerate mergers involve firms engaged in unrelated types of business activity. Two types of conglomerate mergers: 1. Pure conglomerate mergers involve firms with nothing in common. 2. Mixed conglomerate mergers involve firms that are looking for product extensions or market extensions.  Example: General Electric buying NBC television

11. Your company slogan Example for Conglomerate  Walt Disney Company and the American Broadcasting Company.

12. Your company slogan CONCENTRIC MERGERS  Concentric MergersConcentric Mergers  Based on specific management functions whereBased on specific management functions where as the conglomerate mergers are based onas the conglomerate mergers are based on general management functions.general management functions. Example: Citigroup (principally a bank) buying Salomon SmithExample: Citigroup (principally a bank) buying Salomon Smith Barney (an investment banker/stock brokerage operation.Barney (an investment banker/stock brokerage operation.

13. Your company slogan Examples for Concentric Mergers Concentric Mergers :Concentric Mergers :  Nextlink is a competitive local exchange carrier offering services in 57 cities and building a nationwide IP network.  Concentric, a national ISP, offers dedicated and dial-up Internet access, high-speed DSL and VPN services across the U.S. and overseas.

14. Your company slogan PROCESS OF MERGER IN INDIA: The process of merger has the following steps: Approval of Board of Directors Information to the stock exchange Application in the High Court Shareholders and Creditors meetings Sanction by the High Court Filing of the court order Transfer of assets or liabilities Payment by cash and securities Maximum Waiting period:210 days from the filing of notice(or the order of the commission - whichever earlier).

15. Your company slogan BENEFITS OF MERGER Diversification of product and service offerings.  Increase in plant capacity Larger market share . Utilization of operational expertise and research and development (R&D) . Reduction of financial risk. BENEFITS OF MERGER

16. Your company slogan MERGER:WHY & WHY NOT 16 i. Increase Market Share. ii. Economies of scale iii. Profit for Research and development. iv. Benefits on account of tax shields like carried forward losses or unclaimed depreciation. v. Reduction of competition. i. Clash of corporate cultures ii. Increased business complexity iii. Employees may be resistant to change  WHY IS IMPORTANT  PROBLEM WITH MERGER

17. Your company slogan Why India? Dynamic government policies Corporate investments in industry. Economic stability. “Ready to experiment” attitude of Indian industrialists.

18. Your company slogan Impact of Mergers ImpactEmployees Competition Management Public Shareholders

19. Your company slogan WHY DO MERGERS FAIL ?  Lack of human integration  Mismanagement of cultural issues  Lack of communication  Cultural Difference  Flawed Intention  No guiding principles  No ground rules  No detailed investigating  Poor stake holder outreach

20. Your company slogan How to Prevent the Failure ?  Continuous communication – employees, stakeholders, customers, suppliers and government leaders.  Transparency in managers operations .  Capacity to meet new culture higher management professionals must be ready to greet a new or modified culture.  Talent employees by the management.

21. Your company slogan EXPERIENCES IN MERGER Learn from mistakes of others. Define your objectives clearly. Complete strategy to achieve goal. SWOT analysis for the merged business - a must. Conservative attitude necessary at evaluation deskstrong arguments to support project. Pick holes in strategy to get the best Will merged units be able to work at efficient / ideal level? Acquire expertise to interpret changes.

22. Your company slogan Conclusion MERGERS IN CORPORATE CULTURE  Mergers plays important role in corporate restructuring and development of country. In India it is also plays same role. But some times it represent market and financial power. And after liberalization it increased due to liberal government policies.  Mergers are a significant form of business strategy today for Corporates.  The three main objectives behind any MERGERS Transaction, for corporates today is : 1. Is to improve Revenues and Profitability 2. Faster growth in scale and quicker access to market 3. Competition in Globalized Market  The most important factors according to corporate India that contribute to the success of an Mergers Transaction are : 1. Timing 2. Intrinsic Fit 3. Personnel 4. Advisors on legal, policy and financial strategies

23. Your company slogan

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