Acquisition
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The document defines and discusses various aspects of acquisitions. It can be summarized as follows: 1) An acquisition occurs when one company purchases another company or business entity to gain control over it. This involves acquiring a controlling stake in the target company. 2) There are different types of acquisitions, such as horizontal acquisitions between competitors, vertical acquisitions between suppliers and customers, and reverse acquisitions where a smaller company takes over a larger one. 3) Acquisitions can be completed through purchasing shares or assets of the target company. Payment is typically made through cash or stock in the acquiring company. 4) A takeover is similar but usually involves purchasing enough shares
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2) There are three main types of mergers: horizontal (between competitors), vertical (between companies in a supply chain), and conglomerate (between unrelated businesses).
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2) There are three main types of mergers: horizontal (between competitors), vertical (between companies in a supply chain), and conglomerate (between unrelated businesses).
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2. Companies pursue M&A to adapt to competitive pressures, advancements in technology, and economic conditions. Mergers and acquisitions allow companies to expand their business through increased size.
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Advanced Corporate Accounting
This document provides an overview of amalgamation, which occurs when two or more existing companies combine to form a new company. It discusses the key terms and features of amalgamation, including:
- Transferor company: The company being amalgamated into another.
- Transferee company: The new company formed to take over the businesses of the transferor companies.
- There are two types of amalgamation from an accounting perspective: amalgamation in the nature of merger and amalgamation in the nature of purchase. The accounting treatment depends on the type of amalgamation.
- Purchase consideration is the price paid by the transferee company and can take various forms like shares, debentures, cash
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- 1. ACQUISITION Kunwar Atul Singh Institute of Management Studies (FMS), BHU MBA III Sem Roll No. 20 Mliag..
- 2. ACQUISITION Acquisition is the purchase of one business or company by another company or business entity. Acquisition is the acquiring the controlling stake of a target company. When one company takes over another and clearly established itself as the new owner, the purchase is called an acquisition. An acquisition takes place when one company takes over all of the operational management decisions of another. Mliag..
- 3. Both Companies Exist Here both companies exist but Myntra is controlled by Flipkart, All the managerial decisions & strategies of Myntra is fully or partially decided by Flipkart. Comp. A Comp. B A purchases major shares of B Flipkart Myntra Mliag..
- 4. Single Company Exist Zo Rooms is acquired by OYO Rooms. Currently in Indian market only OYO Rooms is existing and business of Zo Rooms is running in name the of OYO Rooms. Comp. A Comp. B A purchases major shares of B OYO Rooms Zo Rooms OYO Rooms Comp. A Mliag..
- 5. TYPES OF ACQUISITION Horizontal Acquisition Example – TFS acquired by OLA Cabs Vertical Acquisition Example –Freecharge acquired by Snapdeal Reverse Acquisition Private company acquires Public company Small company acquires big company Example – TATA steel acquired Corus Back Flip Acquisition A "backflip takeover" is any sort of takeover in which the acquiring company turns itself into a subsidiary of the purchased company. This type of takeover can occur when a larger but less well-known company purchases a struggling company with a very well-known brand. Example – NationsBank’s takeover of the Bank of America, but adopting Bank of America's name Mliag..
- 6. PROCESS OF ACQUISITION Purchase Of Shares • Buyer directly pay to shareholders of acquired comp. • Liabilities transferred as comp. ownership transfers Purchase of Assets • Shareholders of acquired comp. paid back in form of dividend or through liquidation • Liabilities remains with acquired comp. Mliag..
- 7. MODE OF PAYMENT Cash Example – Naspers (PayU) and Citrus Pay deal Stock Payment in the form of the acquiring company's stock, issued to the shareholders of the acquired company at a given ratio proportional to the valuation of the latter. Example – Sun Pharma buy Ranbaxy from Daiichi Sankyo in all share transaction Acquiring Comp. Target Comp. Shareholders of acquired comp. get shares of acquiring comp. Mliag..
- 8. TAKEOVER Takeover is very similar to an acquisition where one company will purchase another for an agreed sum in cash or number of shares. Takeover will most probably be a hostile and unfriendly action in which one company acquires enough shares of another (more than 50%) so that the acquirer is able to take over the operations of the target company. Board of Directors and Management of target company oppose/ resist the takeover but buyer (acquirer) purchase the shares of target company from stock exchange/ small shareholders at premium price or through bidding. A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the acquiring company will make an offer for the outstanding shares. Mliag..
- 9. A takeover is considered "hostile" if the target company's board rejects the offer, and if the bidder continues to pursue it Example- Oracle takeover People Software Please help me No one can save you Mliag..
- 10. REASONS BEHIND ACQUISITION & TAKEOVER Improve the company performance Accelerate growth Acquire skills and technology Economy of scale Economy of scope Increase market share Increase revenue Synergy Entering in foreign market Mliag..
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