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23375389 m-and-a-ppt


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23375389 m-and-a-ppt

  2. 3. <ul><li>1.Introduction </li></ul><ul><li>What is merger? </li></ul><ul><li>What is acquisition? </li></ul><ul><li>What is Takeover? </li></ul><ul><li>3.Reasons of mergers to the company </li></ul><ul><li>4.M&A Activities in India </li></ul><ul><li>5.Case study-Ranbaxy & Daiichi Sankyo Co. Ltd. Merger </li></ul><ul><li>6.Causes for failure of M&A </li></ul><ul><li>7.Conclusion </li></ul>
  3. 4. <ul><li>Important tools of corporate growth </li></ul><ul><li>Alternatively way to achieve growth is resort to external arrangements like M&A </li></ul><ul><li>Daily transaction now a days </li></ul><ul><li>Important area of capital market activity in restructuring a corporation </li></ul><ul><li>Restructuring the corporation to meet global competition </li></ul><ul><li>Main objective –gain profits </li></ul>
  4. 5. <ul><li>M&A has a great scope in different sectors </li></ul><ul><li>India is one of the leading nations in the world in terms of M&A </li></ul><ul><li>85 % are using M& A as a core growth strategy. </li></ul>
  5. 6. <ul><li>Merger is defined as combination of two or more companies into a single company where one survives and the others lose their corporate existence. </li></ul><ul><li>Merger is the fusion of two or more existing companies </li></ul>
  6. 8. <ul><ul><li>An acquisition , also known as a takeover or a buyout , is the buying of one company (the ‘target’) by another. An acquisition may be friendly or hostile. In the former case, the companies cooperate in negotiations; in the latter case, the takeover target is unwilling to be bought or the target's board has no prior knowledge of the offer. Acquisition usually refers to a purchase of a smaller firm by a larger one. </li></ul></ul>
  7. 9. <ul><li>Increased market power </li></ul><ul><li>Learning and Developing new capabilities </li></ul><ul><li>Overcoming entry barriers </li></ul><ul><li>Cost of new product development </li></ul><ul><li>Increase speed to market </li></ul><ul><li>Lower risk than developing new products </li></ul>
  8. 10. <ul><li>W hen one company takes over another and clearly establishes itself as the new owner, the purchase is called an acquisition. From a legal point of view, the target company ceases to exist, the buyer &quot;swallows&quot; the business and the buyer's stock continues to be traded </li></ul><ul><li>In the pure sense of the term, a merger happens when two firms, often of about the same size, agree to go forward as a single new company rather than remain separately owned and operated. This kind of action is more precisely referred to as a &quot;merger of equals&quot;. Both companies' stocks are surrendered and new company stock is issued in its place. </li></ul>
  9. 12. <ul><li>In 2007, there were a total of 676 M&A deals and 405 private equity deals, in 2007, the total value of M&A and PE deals was USD 70 billion, Total M&A deal value was close to USD 51 billion, Private equity deals value increased to USD 19 billion. </li></ul><ul><li>In year 2008.. </li></ul><ul><li>• M&A deals in India in 2008 totaled worth USD 19.8 bn </li></ul><ul><li>• Less compared to last year which stood at 33.1 bn $. </li></ul><ul><li>• Decline of M&A activity was in line with the global activity. </li></ul><ul><li>• Cross border M&A totaled 8.2 bn $ compared to 18.7 bn $. </li></ul>
  10. 13. Acquirer Target Company Country targeted Deal value ($ ml) Industry Tata Steel Corus Group plc UK 12,000 Steel Hidalgo Novelist Canada 5,982 Steel Videocon Daewoo Electronics Corp. Korea 729 Electronics Dr. Reddy’s Labs Beta harm Germany 597 Pharmaceutical Suzlon Energy Hansen Group Belgium 565 Energy HPCL Kenya Petroleum Refinery Ltd. Kenya 500 Oil and Gas Ranbaxy Labs Terapia SA Romania 324 Pharmaceutical Tata Steel NatSteel Singapore 293 Steel Videocon Thomson SA France 290 Electronics VSNL Teleglobe Canada 239 Telecom
  11. 14. <ul><li> Tata steel buys Corus Plc : 12.1$ billion </li></ul><ul><li> Hindalco acquired novelis: 6$ billion </li></ul><ul><li> Tata buy jaguar and land rover : 2.3$ billion </li></ul><ul><li> Essar steel buys Algoma Steel: 1.58$ billion </li></ul><ul><li> Vodafone buys hutch : 11$ billion </li></ul><ul><li> POSCO to invest in building steel manufacturing plants and facilities in India by 2016 </li></ul><ul><li> Goldman Sachs Plans investment in private equity, real estate, and private wealth management </li></ul>
  12. 16. <ul><li>Net Value Asset (NAV) Method </li></ul><ul><li>Yield Value Method </li></ul><ul><li>Market Value Method </li></ul>
  13. 18. <ul><li>Background: </li></ul><ul><li>Daiichi Sankyo Co. Ltd. signed an agreement to acquire 34.8% of Ranbaxy Laboratories Ltd. from its promoters </li></ul><ul><li>The main benefit for Daiichi Sankyo from the merger is Ranbaxy’s low-cost manufacturing infrastructure and supply chain strengths </li></ul><ul><li>Ranbaxy’s addition is said to elevate Daiichi Sankyo’s position from #22 to #15 by market capitalization in the global pharmaceutical market. </li></ul>
  14. 19. <ul><li>SYNERGIES: </li></ul><ul><li>Respective presence in the developed and emerged markets </li></ul><ul><li>To tap the potential of the generics business </li></ul><ul><li>Introduce generic versions </li></ul><ul><li>Competitive advantages </li></ul><ul><li>R&D </li></ul><ul><li>POST ACQUISITION OBJECTIVES: </li></ul><ul><li>Develop new drugs and fill gaps </li></ul><ul><li>Managing the different working cultures </li></ul><ul><li>Undertaking minimal and essential integration </li></ul><ul><li>Consolidate their intellectual capital and acquire an edge over their foreign counterparts </li></ul>
  15. 20. <ul><li>Size Issues : </li></ul><ul><li>Diversification : </li></ul><ul><li>Poor Organization Fit : </li></ul><ul><li>Poor Strategic Fit: </li></ul><ul><li>Striving for Bigness Poor Cultural Fit : </li></ul><ul><li>Limited Focus : </li></ul><ul><li>Failure to Examine the Financial Position: </li></ul><ul><li>Failure to Take Immediate Control : </li></ul><ul><li>Failure of Top Management to follow Up: </li></ul><ul><li>Failure of Leadership Role </li></ul>
  16. 21. <ul><li>It is widely accepted, for instance, that the 'human factor' is a major cause of difficulty in making the integration between two companies work successfully. If the transition is carried out without sensitivity towards the employees who may suffer as a result of it, and without awareness of the vast differences that may exist between corporate cultures, the result is a stressed, unhappy and uncooperative workforce - and consequently a drop in productivity. </li></ul>