PPT on acquisition, meaning of acquisition, what it is? types, examples. Benefits of acquisition. Corporate strategy, Acquisition chapter in MBA. Short PPT. Finance major, Business studies. slide share ppt, for students, self study, business management, MBA studies, merger and acquisition, educational. Bschools, management subject.

1. ACQUISITION
Corporate Strategy
Sabarni Chatterjee
MBA 2nd Year (III sem)
by Sabarni Chatterjee

2. WHAT IS ACQUISITION?
• An acquisition is when one company purchases most or
all of another company's shares to gain control of that
company.
• Purchasing more than 50% of a target firm's stock and
other assets allows the acquirer to make decisions about
the newly acquired assets.
• Acquisitions are transactions in which the ownership
of companies, other business organizations, or their
operating units are transferred or consolidated with other
entities.
• As an aspect of strategic management, Merger
&Acquisition can allow enterprises to grow or downsize,
and change the nature of their business or competitive
position.
by Sabarni Chatterjee

3. WHAT IS ACQUISITION STRATEGY?
• Acquisition strategy involves finding a methodology for the acquisition of target companies
that generates value for the acquirer. The use of an acquisition strategy can keep a
management team from buying businesses for which there is no clear path to achieving a
profitable outcome. Instead of simple growth, an acquirer must understand exactly how its
acquisition strategy will generate value. This cannot be a simplistic determination to
combine two businesses, with a generic statement that overlapping costs will be eliminated.
The management team must have a specific value proposition that makes it likely that each
acquisition transaction will generate value for the shareholders.
by Sabarni Chatterjee

4. WHY MAKE AN ACQUISITION?
Companies acquire other companies for various reasons. They may
seek economies of scale, diversification, greater market share,
increased synergy, cost reductions, or new niche offerings. Other
reasons for acquisitions include those listed below.
Companies merge with or acquire other companies for a host of
reasons, including:
1. Synergies: By combining business activities, overall performance
efficiency tends to increase and across-the-board costs tend to drop,
due to the fact that each company leverages off of the other
company's strengths.
2. Growth: Mergers can give the acquiring company an opportunity
to grow market share without doing significant heavy lifting. Instead,
acquirers simply buy a competitor's business for a certain price, in
what is usually referred to as a horizontal merger. For example, a beer
company may choose to buy out a smaller competing brewery,
enabling the smaller outfit to produce more beer and increase its sales
to brand-loyal customers.
SYNERGY
GROWT
H
SUPPLY
CHAIN
ELIMINATE
COMPETITION
by Sabarni Chatterjee

5. WHY MAKE AN ACQUISITION?
3. Increase Supply-Chain Pricing Power: By buying out one of its suppliers or distributors, a
business can eliminate an entire tier of costs. Specifically, buying out a supplier, which is
known as a vertical merger, lets a company save on the margins the supplier was previously
adding to its costs. Any by buying out a distributor, a company often gains the ability to ship
out products at a lower cost.
4. Eliminate Competition: Many M&A deals allow the acquirer to eliminate future
competition and gain a larger market share. On the downside, a large premium is usually
required to convince the target company's shareholders to accept the offer. It is not uncommon
for the acquiring company's shareholders to sell their shares and push the price lower, in
response to the company paying too much for the target company.
by Sabarni Chatterjee

6. • Adjacent Industry Strategy
An acquirer may see an opportunity to use one of its competitive strengths to buy into an adjacent industry. This approach
may work if the competitive strength gives the company a major advantage in the adjacent industry.
• Diversification Strategy
A company may elect to diversify away from its core business in order to offset the risks inherent in its own industry.
• Full Service Strategy
An acquirer may have a relatively limited line of products or services, and wants to reposition itself to be a full-service
provider. This calls for the pursuit of other businesses that can fill in the holes in the acquirer’s full-service strategy.
• Geographic Growth Strategy
A business may have gradually built up an excellent business within a certain geographic area, and wants to roll out its
concept into a new region. The geographical growth strategy can be used to accelerate growth by finding another business
that has the geographic support characteristics that the company needs, such as a regional distributor, and rolling out the
product line through the acquired business.
• Low-Cost Strategy
In many industries, there is one company that has rapidly built market share through the unwavering pursuit of the low-
cost strategy. This approach involves offering a baseline or mid-range product that sells in large volumes, and for which
the company can use best production practices to drive down the cost of manufacturing.
by Sabarni Chatterjee

7. CHALLENGES WITH ACQUISITIONS
Culture clashes: A company usually has its own distinct culture that has been developing since its inception. Acquiring a company that
culture that conflicts with yours can be problematic.
Duplication: Acquisitions may lead to employees duplicating each other’s duties. When two similar businesses combine, there may be
where two departments or people do the same activity. This can cause excessive costs on wages. M&A transactions, therefore, often lead
reorganization and job cuts to maximize efficiencies. However, job cuts can reduce employee morale and lead to low productivity.
Conflicting objectives: The two companies involved in the acquisition may have distinct objectives since they have been operating
before. For instance, the original company may want to expand into new markets, but the acquired company may be looking to cut
can bring resistance within the acquisition that can undermine efforts being made.
Poorly matched businesses: A business that doesn’t look for expert advice when trying to identify the most suitable company to acquire
end up targeting a company that brings more challenges to the equation than benefits.
Brand damage: M&A may hurt the image of the new company or damage the existing brand. When a marketplace becomes confused,
strength of a brand will eventually suffer. That is because the reputation of a business, multiplied by their visibility, creates strength.
that are strong regionally may be unknown in another region.
by Sabarni Chatterjee

8. TOP ACQUISITIONS IN INDIA
• FLIPKART- WALMART: Walmart acquired
77% Flipkart for $16 billion, making it the
largest acquisition involving an Indian
company, in 2018.
• TATA STEEL-CORUS: In 2007, Tata
Steel took over European steel major Corus
for the price of $12.02 billion, making the
Indian company, the world’s fifth-largest
steel producer.
• VODAFONE-HUTCHISON ESSAR: In
2007, the world’s largest telecom company
(at the time) in terms of revenue, Vodafone,
made an entered the Indian telecom market
by acquiring a 52% stake in Hutchison Essar
Ltd. Vodafone purchased 52% stake in
Hutchison Essar for about $10 billion.
• TATA MOTORS-JAGUAR LAND ROVER:
Tata Motors’ acquisition of luxury car maker
Jaguar Land Rover was for the price of $2.3
billion, in 2008.
• RELIANCE INDUSTRIES-FUTURE
GROUP'S RETAIL BUSINESS:
The acquisition including Reliance taking
over all debts, liabilities, retail stores and a
minority stake in its consumer business, with
an investment of about Rs27,513 crore.
• ZOMATO-UBER EATS: Online food
delivery and restaurant discovery platform
Zomato has acquired Uber Eats, the food
delivery business of ride-hailing giant Uber
India for around Rs 2,485 crore ($350
million).
by Sabarni Chatterjee

9. THANK YOU
by Sabarni Chatterjee