This presentation tell us the types of m&a and their defence.
The information of this presentation is supported with various article theories definition and presentation
5. 2.Conglomerate mergers
A merger between firm involved in totally unrelated business activity
The Walt Disney Co. will acquire Capital Cities/ABC Inc. in a surprise merger of entertainment
giants valued at about $19 billion,
Merge with
6. 3.Concentric Mergers
Merger which are into similar type of business
On April 6, 1998, the merger between Citicorp and Travelers Group was announced to the world,
creating a $140 billion firm with assets of almost $700 billion. The deal would enable Travelers to
market mutual funds and insurance to Citicorp's retail customers while giving the banking
divisions access to an expanded client base of investors and insurance buyers.
Merge
with
7. Vertical mergers
When two companies produce same goods and services for one specific
product
he announced that PayPal sold him x.com, a domain he previously owned. Back in 1999, Musk
launched an online banking service at X.com; the company eventually merged with its rival
Confinity and was renamed to PayPal in 2001
10. 1.Friendly Acquisition
Both the companies approve the acquisition under friendly condition
Johnson & Johnson (J&J) has acquired Netherlands-based biopharmaceutical company Crucell
for close to $2.4 billion dollars, moving J&J prominently into the arena of vaccine development,
according to a company press release. This move comes after several years of partnership between
the two companies
12. Back Flip Acquisition
A backflip takeover is a rare type of takeover in which the acquirer becomes a subsidiary of the
acquired or targeted company after deal completion. The combined entity retains the name of the
acquired company. A backflip takeover gets its name from the fact that it runs counter to the
norm of a conventional acquisition, where the acquirer is the surviving entity and the acquired
company becomes a subsidiary of the acquirer.
While the acquired company's assets are subsumed into the acquiring company, control of the
combined entity is generally in the hands of the acquirer.
For example, DullCo is a large company that has fallen on relatively hard times because the
massive recall of one of its biggest-selling products has hurt its finances and caused large-scale
customer defections. Management decides that its brand has suffered irreparable damage, and
decides to use its financial resources, which are still substantial, to acquire smaller and fast-
growing rival Hotshot Inc. DullCo’s management also decides that business after the completed
takeover will be conducted under the Hotshot name, which will be the surviving entity, with
DullCo becoming a Hotshot subsidiary.
13. Hostile Acquisition
The smaller company having visionary idea is forcefully acquired
Larsen and Toubro Ltd (L&T) gained a controlling interest in Mindtree Ltd, raising its
stake to 60% in the Bengaluru-based company on Wednesday and successfully concluding
India’s first hostile takeover of a software developer.
L&T completed buying the 31% additional stake it targeted to acquire in Mindtree for
₹4,988.82 crore through an open offer as large investors rushed to sell their holdings. The
offer to purchase 50.9 million shares of Mindtree from public shareholders was subscribed
1.2 times.
14. • Mindtree board to consider a share buyback amid L&T’s plans
to buy the 20.4% stake held by CCD founder V.G. Siddhartha
• The promoters have a two-pronged plan with a singular
objective: purchase Mindtree shares from Siddhartha to prevent a
hostile takeover by an outsider
https://www.livemint.com/companies/news/mindtree-plans-defence-against-hostile-takeover-by-l-t-1552675956484.html
15. Poison pill
In July 2018, leading American restaurant franchise Papa John’s International Inc.’s (PZZA)
board voted to adopt the poison pill to prevent ousted founder John Schnatter from gaining
control of the company. Schnatter, who then owned 30% of the company’s stock, was the largest
shareholder of the company.
To repeal any possible takeover attempts by Schnatter, the company's board of directors adopted
a Limited Duration Stockholders Rights plan (a poison pill provision). It granted existing
investors, except for Schnatter and his holding company, a dividend distribution of one right per
common share. The New York Times reported that the plan would take effect if Schnatter and his
affiliates raised their combined stake in the company to 31%, or if anyone were to buy 15% of the
common stock without the board’s approval.
Since Schnatter was excluded from the dividend distribution, the tactic effectively made a hostile
takeover of the company unattractive as the potential acquirer would have to pay twice the value
per share of the company's common stock. It prevented him from trying to take over the company
he founded by buying its shares at market price.
16. Poison put
A company's board of directors believes that a larger competitor may attempt to acquire it in the future. As a
defense, the company incurs new debt by issuing corporate bonds. As part of the newly issued bond, the board
includes a poison put covenant, which is a provision that stipulates bondholders can receive early repayment of
the debt should a triggering event occur, such as a hostile takeover. The total value of the bonds is $50 million.
For the competitor to successfully acquire the company, it must not only be able to afford the purchase of a
controlling interest of shares but also afford a potential immediate repayment of $50 million to bondholders. If
the acquirer does not have the money to pay this additional acquisition cost, they may need to withdraw their
hostile takeover attempt, which means the poison put strategy was effective for the target company.
17. Golden Parachute
Yahoo laid out its golden parachute plans for all of its full-time employees Tuesday,
in a filing with the Securities and Exchange Commission. The filing outlines two
change-in-control severance plans, should the Internet search pioneer find itself
under new ownership, aka Microsoft.
18. Supermajorities and Voting Shareholders
A supermajority of voters is usually counted as a company’s shareholder meeting. This can be
an annual meeting or a non-regular meeting throughout the year, depending on the nature
and urgency of the matter being voted upon. Shareholder meetings are generally
administrative sessions that follow a specific format that is decided in advance. The format is
usually a parliamentary procedure, with specific time allocated for each speaker and protocol
for shareholders who wish to make statements.
A corporate secretary, attorney, or another official often presides over the process. At the
conclusion of the meeting, the minutes are formally recorded.
In May 2018, Duke Energy (NYSE: DUK) issued a statement noting that a binding
company-sponsored proposal was not approved after it did not achieve the required 80
percent of total outstanding shares. The proposed amendment was to eliminate supermajority
voting requirements in Duke’s Restated Certificate of Incorporation of Duke Energy
Corporation.
19. Greemail
Sir James Goldsmith was a notorious corporate raider of the 1980s. He orchestrated two high-profile
greenmail campaigns against St. Regis Paper Company and Goodyear Tire and Rubber Company.
Goldsmith earned $51 million from his St. Regis venture and $93 million from his Goodyear raid, which
took only two months.
In October 1986, Goldsmith purchased an 11.5% stake in Goodyear at an average cost of $42 a share. He
also filed plans to finance a takeover of the company with the Securities & Exchange Commission (SEC).
Part of his plan was to have the company sell off all of its assets except its tire business, which was not
received well by Goodyear executives.
In response to Goodyear's resistance, Goldsmith proposed to sell his stake back to the company for $49.50
share; this strong-arm proposal is often referred to as the ransom or the goodbye kiss. Eventually, Goodyea
accepted and subsequently repurchased 40 million shares from shareholders at $50 per share, which cost t
company $2.9 billion. Immediately following the repurchase, Goodyear’s share price fell to $42.
20. Pac man defence
In 1982, Bendix Corp. attempted to acquire Martin Marietta by purchasing a controlling amount of its
stocks. Bendix became the owner of the company on paper. However, Martin Marietta’s management
retaliated by selling off its chemical, cement and aluminum divisions, and borrowing over $1 billion to
counter the acquisition. The conflict resulted in Allied Corp. acquiring Bendix.
In February 1988, after a month-long takeover fight that began when E-II Holdings Inc. made an offer for
American Brands Inc., American Brands bought E-II for $2.7 billion. American Brands financed the merger
through existing lines of credit and a private placement of commercial paper.
Finally, in October 2013, Jos. A. Bank launched a bid to take over competitor Men’s Wearhouse. Men’s
Wearhouse rejected the bid and countered with its own offers. During negotiations, Jos. A. Bank bought
Eddie Bauer to gain more control in the marketplace. Men’s Wearhouse ended up buying Jos. A. Bank for
$1.8 billion.
