Mergers & acquisitions

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Mergers & acquisitions

  1. 1. MERGERS & ACQUISITIONSBy-Prabhjot 112Jaspreet 66Mithun 82
  2. 2. Business CombinationWhy Business Combine??? -Synergy -Diversification -Growth -Eliminate Competition
  3. 3. MERGERSB usiness Amalgamation ACQUISITIONSC ombination Takeovers
  4. 4. When two or more companies combines into one company may merge with existing co,MERGER form new company…… in India merger is called Amalgamation
  5. 5. Merging Companies are called Amalgamating CompaniesMERGER New Company is called Amalgamated Company
  6. 6. MERGERMerger through Merger through ABSORPTION CONSOLIDATION
  7. 7. Merger Through AbsorptionAn Absorption is Combination oftwo or more companies into an existing company All companies except one lose their identity
  8. 8. Example—• Absorption of Tata Fertilisers Ltd (TFL) by Tata Chemicals Ltd. (TCL)• Tata Oil Mills Ltd. (TOMCO) with Hindustan Lever Ltd. (HLL)
  9. 9. Merger Through ConsolidationA consolidation is a combinationof two or more Companies into a new Company All companies are dissolved to form a new Company
  10. 10. Example— Hindustan Computers Ltd + Hindustan Instruments Ltd + Indian Software Co. Ltd + Indian Reprographic Ltd = Hindustan Computers Ltd(HCL)
  11. 11. TYPES OF MERGER• Horizontal Merger• Vertical Merger• Market-extension Merger• Product-extension Merger• Conglomeration
  12. 12. 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
  13. 13. 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
  14. 14. 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
  15. 15. 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.
  16. 16. 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
  17. 17. 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……..
  18. 18. Example—-Godrej Consumer Care bought Keyline Brands-Dabur acquired Balsara
  19. 19. 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.
  20. 20. 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.
  21. 21. • 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
  22. 22. 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
  23. 23. 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

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