2. CONTENTS
• Definition of ‘Merger’
• How can a merger take place
• Types of Mergers
• Motives of merger
• Factors leading to merger
• Some famous mergers
3. Definition of ‘Merger’
• The combining of two or more companies,
generally by offering the stock holders of one
company securities in the acquiring company
in exchange for the surrender of their stock.
• Two companies become one.
• Mutually between both firms.
4. How can a merger take place ?
• By purchase of assets.
• By purchase of common shares.
• By exchange of share of assets.
• Exchange of shares for shares.
5. Types Of Mergers
• Horizontal merger
Between firms operate in the same space.
Eg. Boieng & McDonnell Douglas
• Vertical Merger
Backward and forward integration.
Firms working in different stages of production join together.
A manufacturer owns its supplier and/or distributor.
Eg. Time Warner & TBS
• Conglomerate Merger
It involves totally unrelated business activities.
Merges with no horizontally or vertically merger companies.
Eg. Pepsico & Pizza Hut
• Cross-Border Merger
Between firms in two different countries.
Increases foreign exchange to the country the merging firm belong.
Eg. Bharti-AXA
6. Motives Of Merger
• Create synergy
• Gain market share
• Economies of scale
• Enter new market
• Acquire technology
• Utilization of surplus, funds and managerial
effectiveness
7. Factors leading to mergers
• Internal Factors
Funds/capital
Working capital
Time management / Resource Management
Managerial Efficiency
Large scale
Increase of turnover and revenue
• External Factors
Competition
Monopolistic
To reach global market having large scale business
Technology
Advertisements and promotions
Synergy
