TYPES OF MERGER 1 Horizontal Merger• It refers to the merger of two companies who are direct competitors of one another. They serve the same market and sell the same product.Example—• The formation of Brook Bond Lipton India Ltd. through the merger of Lipton India and Brook Bond• The merger of Bank of Mathura with ICICI (Industrial Credit and Investment Corporation of India) Bank
TYPES OF MERGER 2 Vertical Merger• This type of merger involves a customer and a company or a supplier and a company merging. Imagine a bat company merging with a wood production company. This would be an example of the supplier merging with the producer and is the essence of vertical mergers.Example—• Pixar & Disney
TYPES OF MERGER 3 Market-extension Merger• This involves the combination of two companies that sell the same products in different markets. A market-extension merger allows for the market that can be reached to become larger and is the basis for the name of the merger.Example- Dell’s Alienware Gaming Laptops
TYPES OF MERGER 4 Product-extension Merger• It takes place between two business organizations that deal in products that are related to each other and operate in the same market. Companies which sell different products of a related category.
TYPES OF MERGER 5 Conglomeration• It refers to the merger of companies, which do not either sell any related products or cater to any related markets. Here, the two companies entering the merger process do not possess any common business ties.Example—• Tata-Sky
ACQUISITIONAn Acquisition may be an act of acquiringeffective control by one company over assetsor management of another company withoutany combination of companies……..Companies may remain independent, separateBut there may be change in control ofCompanies……..
Example—-Godrej Consumer Care bought Keyline Brands-Dabur acquired Balsara
TAKEOVERS• A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publically traded, the acquiring company will make an offer for the outstanding shares.
Types Of Takeovers• Friendly Takeover- Also commonly referred to as ‘negotiated takeover’, a friendly takeover involves an acquisition of the target company through negotiations between the existing promoters and prospective investors. This kind of takeover is resorted to further some common objectives of both the parties.
• Hostile Takeover- A hostile takeover can happen by way of any of the following actions: if the board rejects the offer, but the bidder continues to pursue it or the bidder makes the offer without informing the board beforehand.Example- HP taking overCOMPAQ
Why Should Firms Takeover???• To gain opportunities of market growth• To seek gain benefits from economies of scale• To gain a more dominant position in the market• To acquire the skills or strengths of another firm to complement existing business• To diversify its products or service range in the market
Indias 11 largest M&A deals• Tata Steel-Corus: $12.2 billion• Vodafone-Hutchison Essar: $11.1 billion• Hindalco-Novelis: $6 billion• Ranbaxy-Daiichi Sankyo: $4.5 billion• ONGC-Imperial Energy: $2.8 billion• NTT DoCoMo-Tata Tele: $2.7 billion• HDFC Bank-Centurion Bank of Punjab: $2.4 billion• Tata Motors-Jaguar Land Rover: $2.3 billion• Suzlon-RePower: $1.7 billion• RIL-RPL merger: $1.68 billion