2. 1. Reasons of M & A
2. Merger & Acquisition
3. Stages of M & A
4. Types of M & A
5. Difference Between M & A
6. Deals & Deal Value
7. Pros & Cons Of M & A
8. Strategies
9. Valuation & Regulatory Bodies
FLOW OF PRESENTATION
3. REASONS OF M & A
Expanding the product range for building a good product
portfolio
Gaining access to approved facilities outside India
Financial factors also motivate some M & A
Access to distribution channels and gaining market presence
Pressure by governmental agencies, insurance companies various
countries to reduce cost of medicines
Source: Mergers, Acquisitions and Corporate Restructurings by Patrick A. Gaughan (pg. no. 14)
1
4. MERGER
A merger is an agreement that unites two existing companies
into one new company.
The shareholders of the combining firms often remain as joint
owners of the combined entity
Source: Creating Value from Mergers and Acquisitions by Sudi Sudarsanam (pg. no. 3)
2
5. ACQUISITION
An acquisition is a situation whereby one company purchases
most or all of another company's shares in order to take control.
An acquisition occurs when a buying company obtains more
than 50% ownership in a target company.
It is also known as Takeover or a Buyout
3
Source: //economictimes.indiatimes.com/articleshow/66604107.
2.12 B USD
12.5 M USD
6. STAGES OF M & A
1
4
5
3
Source: Creating Value from Mergers and Acquisitions by Sudi Sudarsanam (pg. no. 3-9)
4
7. TYPES OF M & A
M & A
Horizontal
Merger
Same type of
Companies
merge
Vertical
Merger
Companies that
have a buyer
seller relationship
Conglomerate
When companies
are not
competitor
5
Source: https://iclg.com/practice-areas/mergers-and-acquisitions-laws-and-regulations/india
8. DIFFERENCE BETWEEN M & A
Merger Acquisition
Merging of two organizations
into one
It is a mutual decision
They are more expensive as
the legal cost involved is high
Time consuming and company
has to maintain legal issues
Dilution of ownership occurs
in merger
Buying one organization by
another
It can either be a friendly
turnover or a hostile turnover
Acquisitions are relatively
cheaper
It is faster and an easier
transaction
Does not experience the
dilution of ownership
6
Source: Mergers, Acquisitions and Corporate Restructurings by Patrick A. Gaughan .
9. 2014
DEALS AND DEAL VALUE
48.3
220
79.5
226
219.3
229
188.9
290
188.9
290
67.7
123
2012 2013
2015 Frist nine months
of 2017
2016
Deal Value
(Billion USD)
Number of
deals
7
10. PURCHASER Year TARGET DEAL VALUE MOTIVATION
Aurobindo
Pharma
13 Nov.2018
Advent
Pharmaceuticals
$12.5 million
generic inhaled medicines for
global markets.
Takeda
Pharmaceutical
2017
Ariad
Pharmaceuticals
$5.2 billion
Cancer drugs (two approved
pipeline)
Novartis 2017
Advanced
Accelerator
Applications
$3.9 billion
Radiopharmaceuticals for
cancer diagnosis and
treatment
Eli Lilly & Co. 2017
CoLucid
Pharmaceuticals
$960 million
Migraine and pain
management treatments
Sanofi 2017 Protein Sciences $750 million Non-egg-based vaccines
Zydus Cadila 19 Jan. 2017
Sentynl
Therapeutics
$8 billion
marketing of products in the
pain management segment
Source: //economictimes.indiatimes.com
DEALS AND DEAL VALUE
8
11. PROS AND CONS OF M & A
Eliminations of Competition
Diversification
Economic Necessity
Synergy
Increase in Value
Increase Market Share
Employees May be Resistance
to Change
Inadequate Valuation of target
Dilution of Ownership
Inability to Synergy
9
Source: Mergers, Acquisitions and Corporate Restructurings by Patrick A. Gaughan
12. STRATEGIES M & A
10
1. Friendly M or A
2. Negotiated M or A
3. Hostile M or A
4. Reverse Bid
Source: https://iclg.com/practice-areas/mergers-and-acquisitions-laws-and-regulations/india
13. VALUATION & SHARE EXCHANGE
Valuation of Company
1. Asset base
2. Earning base
3. P/E multiple
Share Exchange
1. Intrinsic Value
2. EPS of each Company
3. Market Price
11
Source: https://iclg.com/practice-areas/mergers-and-acquisitions-laws-and-regulations/india
