Manu's Conglomerate Mergers

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Conglomerate mergers and Acquisitions are explained with examples

Conglomerate mergers and Acquisitions are explained with examples

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  • Aol suffered from low quality of service, Huge difference in cultures and due to difference in technology phase caused problems and Lack of synergy.

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  • 1. International Strategic management Conglomerate Mergers Presented By K. Manoj Kumar (Roll No: 41)
  • 2. What is Conglomerate Merger..? Definition: • • A conglomerate merger is a type of merger whereby the two companies that merge with each other are involved in different sorts of businesses. The importance of the conglomerate mergers lies in the fact that they help the merging companies to be better than before. The term conglomerate mergers also implies that the two companies that are merging do not even have the same customer base as they are in totally different businesses.
  • 3. Types Pure conglomerate merger The pure conglomerate merger is one where the merging companies are doing businesses that are totally unrelated to each other Mixed conglomerate merger The mixed conglomerate mergers are ones where the companies that are merging with each other are doing so with the main purpose of gaining access to a wider market and client base or for expanding the range of products and services that are being provided by them
  • 4. Conglomerate Mergers are Sub-divided Into 2 types Financial Conglomerates • These conglomerates provide a flow of funds to every segment of their operations, exercise control and are the ultimate financial risk takers. They also: – Reduce risk – Improve the quality of general and functional managerial performance – Provide effective competitive process.
  • 5. Conglomerate Mergers are Sub-divided Into 2 types Managerial Conglomerates Managerial conglomerates provide managerial counsel and interaction on decisions thereby, increasing potential for improving performance. When two firms of unequal managerial competence combine, the performance of the combined firm will be greater than the sum of equal parts that provide large economic benefits
  • 6. Reasons For Conglomerate merger  To Increase the market share  To gain the Technological advantage  To overcome the trade barriers  To Increase their product line  To diversify and distribute their products to wide range of customers  To improve their capabilities To reduce their level of exposure to risks
  • 7. Example of Conglomerate Mergers Examples: AOL & Time Warner L&T and Voltas Ltd Walt Disney Pictures and ABC Broadcasting company Etc..
  • 8. Overview- AOL  First established in 1983 and in 1985 named Quantum Computer  In 1991 the company renamed America Online  In 1992 the company went public in NASDAQ  Share price increased 50000% in two years  Products: Online Portals, Web Browsers, Instant Messengers, Online Gaming, Video Functions Served: Marketing, Advertising, Entertainment, Communications, e-Commerce. Revenue Generation Mechanism: Advertising, Subscriptions.
  • 9. Time Warner  Time Warner, is a result of merger in 1989 worth $14 Billion between  Time,  Established in 1922  Main business is magazine publishing  Followed by cable television in late 70s by acquiring American televesion and communication company.  Warner Brothers  Established in 1923 Main Business is film production Followed by music production and cable television operator business in the 60s
  • 10. AOL Time Warner  In Jan 2001, it had been announced the Merger between AOL and Time Warner  The Merger aimed to - “Create the world’s first fully integrated media and communication company for the internet century ” AOL would own 55% of Time Warner. Stock combination value was $350bn. AOL and Time Warner failed to implement their visions and communicate them
  • 11. SWOT Analysis
  • 12. AOL Time Warner The merger was meant to create synergies between the two companies, taking advantage of the high growth rate of AOL, its large subscriber base, the high-speed cable lines owned by Time Warner and content provided by Time Warner. However, the collapse of the dotcom bubble in 2000 and the economic slowdown in 2001 essentially derailed this plan; in 2002 the company reported a loss of $99 billion, which was, at the time, the greatest annual loss ever recorded.
  • 13. Sony Make. Believe Sony, which had previously been primarily in the consumer electronics manufacturing business, moved into the media industry through a series of conglomerate mergers. In 1989, Sony acquired the American film and television production corporation Columbia Pictures Entertainment Inc., made up of Columbia Pictures and Tristar Pictures, from Coca-Cola for $3.4 billion. In 1991, the newly acquired company was renamed Sony Pictures Entertainment and became Sony's key media division.