Mergers and acquisitions (M&A) is a general term that refers to the consolidation of companies or assets. M&A can include a number of different transactions, such as mergers, acquisitions, consolidations, tender offers, purchase of assets and management acquisitions.

1. ALLPPT.com _ Free PowerPoint Templates, Diagrams and Charts
Subject: Financial Management
Presented by: Joseph F. Valencia
MERGERS & ACQUISITIONS

2. Mergers and Acquisitions Definitions
Merger
is an agreement that unites
two existing companies into one
new company.
Acquisition
is the purchase of a company
or the division of a company.
Company
A
Company
B
Company
C
Company
X
Company
Y
Company
X

3. TYPES OF MERGERS
Type Characteristic Example
Horizontal
merger
Companies are in the
same line of business,
often competitors.
Walt Disney Company
buys Lucasfilm (October
2012).
Vertical merger Companies are in the sa
me line of production
(e.g., supplier–customer)
Google acquired
Motorola Mobility
Holdings (June 2012).
Conglomerate
merger
Companies are in
unrelated lines of
Berkshire Hathaway
acquires Lubrizol (2011).

4. TYPES OF MERGERS Ex: Conglomerate Merger
Berkshire Hathaway Inc. is an American multinational conglomerate
holding company headquartered in Omaha, Nebraska, United States.
Berkshire Hathaway traces its roots to a textile manufacturing company.
According to the Forbes Global 2000 list and formula, Berkshire Hathaway
is the third largest public company in the world, and the ninth largest con
glomerate by revenue.
The company wholly owns the following:

5. TYPES OF MERGERS Ex: Conglomerate Merger
The Lubrizol Corporation, a Berkshire Hathaway company, is a market-dr
iven global company. We combine complex specialty chemicals to optimi
ze the quality, performance and value of our customers' products while r
educing the environmental impact.
Lubrizol Chemico Philippines, Inc.
Lot 5, Block 1 Platium Street
Brgy Cabilang Baybay
Carmona 4116 Cavite
Filipinas

6. M&A Companies in the Philippines
Universal Robina Corp,
founded by tycoon
John Gokongwei, wants
to sell the rights to manuf
acture and distribute Hunt
’s products to Century
Pacific Food’s Corp, the
maker of Century Tuna
and Argentina Corned
Beef.
This transaction, URC, said, would enable it to focus on its core
snack food and beverage business. Universal Robina’s brands
include Jack n Jill and C2 iced tea.

7. M&A Companies in the Philippines
SM Investments Corp
(SMIC). in March said it
was acquiring a 34.5%
stake in 2GO, for its
first foray into the fast-gro
wing logistics business. T
he conglomerate, founded
by the country’s richest m
an, Henry Sy, wants to ad
apt to the changing retail
landscape.
“Some people will like to order from the comfort of their living
room, some go to the mall to socialize and interact with other
shoppers. We are going to cater to different ways,” SMIC vice
chairman Tersita Sy-Coson said.

8. M&A Companies in the Philippines
The Ayala Group said in
February 2017 that it was
acquiring nearly half of on
line retailer Zalora, as it
expands into e-commerce.
The fusion of physical and
virtual spaces will create
an “omni-channel retail
experience,” according to
Zalora, which plans to
bring its “pop-up” stores
to Ayala Malls.

9. M&A Companies in the Philippines
Land Bank of the
Philippines (LBP)
announced in November
2017 that it would acquire
Philippine Postal Savings
Bank and spin it off into a
lender for overseas
Filipino workers.
Finance Secretary Carlos
Dominguez said PostBank
was in the best position
to serve overseas workers,
given its ties to the postal
service.

10. M&A Companies in the Philippines
PLDT Inc. and Globe Tele
com, said in May last year
that it would buy rival
San Miguel Corp’s teleco
mmunications assets for
P70 billion, effectively
stopping the entry of a
third player in the
industry hounded by
complaints of bad service.
Access to San Miguel’s 700 Mhz frequency will increase internet
speeds, PLDT and Globe said. The country’s anti-competition
watchdog is investigating the deal for alleged violation of
competition laws.

11. Advantages of M&A
1. Merge their power and control over the markets
– the most common reason for firms to enter into
M&A
2. Synergy – the magic power that allow for increased
value efficiencies of the new entity.
3. Cost reduction – economies of scale is formed by s
haring resources and services
4. Decrease of Risk – in terms of financial risk
5. Become competitive – in terms of technological de
velopments
6. Tax benefits – the biggest advantage, as firms
will fully build use of tax-shields.

12. Disadvantages of M&A
1. Loss of experienced workers.
2. Employees of the small merging firm may require
exhaustive re-skilling.
3. Frictions and internal competition that may occur
among the staff of the united companies.
4. Retrenchments – due to duplication of work
5. Increase in costs – implementation of the merger
and acquisition dealing are delayed.
6. The uncertainty with respect to the approval of
the merger by proper assurances.
7. The return of the share of the company that
caused buyouts of other company was less
than the return of the sector as a whole.

13. Antitrust Law: United States
Regulation of
Mergers and
Acquisitions
Antitrust
Law
Securities
Law

14. Antitrust Law: United States
• Made combinations, contracts, and conspiracies in restraint of trade or
attempts to monopolize illegal
Sherman Antitrust Act (1890)
• Outlawed specific business practices
Clayton Antitrust Act (1914)
• Closed loopholes in the Clayton Act
Celler–Kefauver Act (1950)
• Gave the FTC and the Justice Department an opportunity to review and
challenge mergers in advance
Hart–Scott–Rodino Antitrust Improvements Act (1976)

15. Securities Law: United States
• Requires public disclosure when a party acquires 5% or more of a
target’s common stock.
Williams Act (1968):

16. Law of M&A in the Philippine Setting
 There is no centralized data available on M&A in the Philippines.
 M&A is primarily governed by the Corporation Code and the Civil
Code of the Philippines, as well as the Securities Regulation Code
(SRC) when listed companies are involved. M&A would have to comply
with the nationality requirements in the Philippine Constitution, the
Foreign Investments Act, and other laws as applicable.
 Most M&A does not require regulatory consent or approval except
for some companies engaged in regulated businesses such as banking,
insurance and telecommunications.
 Acquisitions in the Philippines are typically structured as share
purchases, as these are generally simpler to implement and more
tax-efficient.
 Need to comply with tender-offer rules if the target is a public company
(such as one listed on the Philippine Stock Exchange, or PSE) and the
buyer will acquire at least 35% of such company’s capital stock

17. Research Suggests:
20% of all mergers and
acquisitions are successful
60% produce disappointing
results
20% are clear failures

18. Reasons for M&A Failures
1+1 = 3 sounds great but in practice or reality every time it's not work
properly and go awry. Historical trends show that roughly 2 thirds of huge
mergers can let down on their own terms, which implies they're going to
lose worth on the stock exchange. The motivations that mainly drive
mergers are frequently blemished and efficiencies from economies of
scale might prove elusive (Investopedia, 2010).
Conclusions
One size does not match all. Several firms think that the most effective
way to get ahead is to expand business boundaries through mergers and
acquisitions (M&A). Mergers produce synergies and economies of
scale, increasing operations and cutting prices. Investors will take comfort
within the idea that a merger can deliver increased market power.

20. References:
• https://www.ukessays.com/essays/economics/advantages-an
d-disadvantages-of-mergers-and-acquisition-economics-ess
ay.php
• https://www.google.com