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MERGERS   & ACQUISITIONS

By-
Prabhjot 112
Jaspreet 66
Mithun 82
Business Combination
Why Business Combine???



 -Synergy
                   -Diversification
 -Growth
                   -Eliminate Competition
MERGERS
B   usiness
                           Amalgamation

                 ACQUISITIONS

C   ombination
                                Takeovers
When two or more companies
          combines into one company

         may merge with existing co,
MERGER   form new company……

         in India merger is called
          Amalgamation
Merging Companies
         are called

         Amalgamating
         Companies


MERGER
         New Company is
         called

         Amalgamated
         Company
MERGER


Merger through    Merger through
 ABSORPTION       CONSOLIDATION
Merger Through Absorption



An Absorption is Combination of
two or more companies into an
       existing company

 All companies except one lose
         their identity
Example—

• Absorption of Tata Fertilisers Ltd (TFL) by Tata
  Chemicals Ltd. (TCL)

• Tata Oil Mills Ltd. (TOMCO) with Hindustan
  Lever Ltd. (HLL)
Merger Through Consolidation



A consolidation is a combination
of two or more Companies into a
         new Company


 All companies are dissolved to
      form a new Company
Example—

           Hindustan Computers Ltd
                      +
           Hindustan Instruments Ltd
                      +
            Indian Software Co. Ltd
                       +
            Indian Reprographic Ltd
                      =
       Hindustan Computers Ltd(HCL)
TYPES OF MERGER
•   Horizontal Merger
•   Vertical Merger
•   Market-extension Merger
•   Product-extension Merger
•   Conglomeration
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
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
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
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.
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
ACQUISITION


An Acquisition may be an act of acquiring
effective control by one company over assets
or management of another company without
any combination of companies……..

Companies may remain independent, separate
But there may be change in control of
Companies……..
Example—

-Godrej Consumer Care bought Keyline Brands

-Dabur acquired Balsara
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.
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.
• 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 over
COMPAQ
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
India's 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
Mergers & acquisitions
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Mergers & acquisitions

  • 1. MERGERS & ACQUISITIONS By- Prabhjot 112 Jaspreet 66 Mithun 82
  • 2. Business Combination Why Business Combine??? -Synergy -Diversification -Growth -Eliminate Competition
  • 3. MERGERS B usiness Amalgamation ACQUISITIONS C ombination Takeovers
  • 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. Merging Companies are called Amalgamating Companies MERGER New Company is called Amalgamated Company
  • 6. MERGER Merger through Merger through ABSORPTION CONSOLIDATION
  • 7. Merger Through Absorption An Absorption is Combination of two or more companies into an existing company All companies except one lose their identity
  • 8. Example— • Absorption of Tata Fertilisers Ltd (TFL) by Tata Chemicals Ltd. (TCL) • Tata Oil Mills Ltd. (TOMCO) with Hindustan Lever Ltd. (HLL)
  • 9. Merger Through Consolidation A consolidation is a combination of two or more Companies into a new Company All companies are dissolved to form a new Company
  • 10. Example— Hindustan Computers Ltd + Hindustan Instruments Ltd + Indian Software Co. Ltd + Indian Reprographic Ltd = Hindustan Computers Ltd(HCL)
  • 11. TYPES OF MERGER • Horizontal Merger • Vertical Merger • Market-extension Merger • Product-extension Merger • Conglomeration
  • 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. 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. 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. 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. 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. ACQUISITION An Acquisition may be an act of acquiring effective control by one company over assets or management of another company without any combination of companies…….. Companies may remain independent, separate But there may be change in control of Companies……..
  • 18. Example— -Godrej Consumer Care bought Keyline Brands -Dabur acquired Balsara
  • 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. 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. • 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 over COMPAQ
  • 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. India's 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