mergers and acquisitions

1. Mergers and Acquisitions

2. What Does Merger Mean?

The combining of two or more companies,
generally by offering the stockholders of one c
ompany securities in the acquiring company in
exchange for the surrender of their stock.

3.  Diversification of product and service offerings
 Increase in plant capacity
 Larger market share
 Utilization of operational expertise and research and developm
ent (R&D)
 Reduction of financial risk .
Benefits of merger

4. Why do mergers fail ?
 Lack of human integration
 Mismanagement of cultural issues
 Lack of communication

5. Types of Merger
1. Horizontal Merger
2. Vertical Merger
3. Conglomerate Merger
4. Concentric Merger

6. Horizontal Merger
 Horizontal mergers are those mergers where the companies ma
nufacturing similar kinds of commodities or running similar ty
pe of businesses merge with each other.
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.

7. Vertical Merger
 A merger between two companies producing d
ifferent goods or services.
Ex: Pixar-Disney Merger

8. Conglomerate Merger
A merger between firms that are involved in totally u
nrelated business activities.
Two types of conglomerate mergers:
1. Pure conglomerate mergers involve firms with nothing in commo
n.
2. Mixed conglomerate mergers involve firms that are looking for pr
oduct extensions or market extensions.

9. Concentric Merger
A type of merger where two companies are in the
same or related industries but do not offer the same pr
oducts. In a concenetric merger, the companies may s
hare similar distribution channels, providing synergie
s for the merger.

10. Acquisition
When one company takes over another and clearly
established itself as the new owner, the purchase is
called an acquisition.
• Acquisition is generally considered negative in nature.