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Team-8
Merges and Acquisition
 Inorganic tools of growth for an
Organization.
 More than half of all M&As fail.
Most happening mergers and
acquisitions in India in the year 2014
 Flipkart- Myntra
 Asian Paints- Ess Ess Bathroom
Products
 RIL- Network 18 Media and
Investments
 Ranbaxy- Sun Pharmaceuticals
 TCS- CMC
 Yahoo- Bookpad
Merger
 Is a phenomenon where two
organizations of relatively equal
size decide to come together to
form a single new organization.
 The owners of both pre- merged
organizations become owners of
this new entity.
Acquisitions
 Is the phenomenon where one
organization takes over the
ownership of another.
 The organization that has been
taken over is often referred to
as the ‘target’ in M&A parlance.
Friendly Acquisition versus
Hostile Takeover
 A situation in which a target
company's management and
board of directors agree for
acquisition by another company.
 An attempt to take over a
company without the approval
of the company's board of
directors.
Friendly Acquisitions-The
Mantra
 Five Gates to understand the
checks and controls that need to
be in place, in each step of the
acquisition deal , to ensure
success:
 Gate 1: Keeping the Radar vigilant
 Gate 2: Getting Priorities Straight
 Gate 3: Pre-negotiation
 Gate 4: Striking the Deal
 Gate 5: Deal Closure and
Integration
MODES OF DEAL
PAYMENT
 Shareholders need to be appropriately
compensated either by
cash
shares
Cash:
Ownership is acquired by Holding
Company
Existing shareholders will get shares
Stock
Paid shares instead of cash
Swap ratio
New shareholders being added
ILLUSTRATION-PepsiCo’s
Acquisition of Quaker Oats
ILLUSTRATIONS-The HP-
Compaq Merger
 Due to lot of Competitors, HP and
Compaq Faced a Financial issues.
 On September 04, 2001, HP and
Compaq were announced to merge.
 HP was to buy Compaq for US$ 24
billion in stock in the biggest ever
deal in the history of the computer
industry.
 The merged entity would have
operations in more than 160
countries with over 145,000
employees.
 The Shares of HP and Compaq are
declined by 21.5% and 15.7%
respectively in two days.
 The pair lost US$ 13 billion in market
capitalization in a couple of days.
 In the next two weeks, HP's stock
went down by another 17%, amidst a
lot of negative comments about the
merger from analysts and the
company's competitors.
 Finally it became as a Failure model.
Conclusion

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Growth through Mergers and Acquisition

  • 2. Merges and Acquisition  Inorganic tools of growth for an Organization.  More than half of all M&As fail.
  • 3. Most happening mergers and acquisitions in India in the year 2014  Flipkart- Myntra  Asian Paints- Ess Ess Bathroom Products  RIL- Network 18 Media and Investments  Ranbaxy- Sun Pharmaceuticals  TCS- CMC  Yahoo- Bookpad
  • 4. Merger  Is a phenomenon where two organizations of relatively equal size decide to come together to form a single new organization.  The owners of both pre- merged organizations become owners of this new entity.
  • 5. Acquisitions  Is the phenomenon where one organization takes over the ownership of another.  The organization that has been taken over is often referred to as the ‘target’ in M&A parlance.
  • 6. Friendly Acquisition versus Hostile Takeover  A situation in which a target company's management and board of directors agree for acquisition by another company.  An attempt to take over a company without the approval of the company's board of directors.
  • 7. Friendly Acquisitions-The Mantra  Five Gates to understand the checks and controls that need to be in place, in each step of the acquisition deal , to ensure success:  Gate 1: Keeping the Radar vigilant  Gate 2: Getting Priorities Straight  Gate 3: Pre-negotiation  Gate 4: Striking the Deal  Gate 5: Deal Closure and Integration
  • 8. MODES OF DEAL PAYMENT  Shareholders need to be appropriately compensated either by cash shares Cash: Ownership is acquired by Holding Company Existing shareholders will get shares Stock Paid shares instead of cash Swap ratio New shareholders being added
  • 10. ILLUSTRATIONS-The HP- Compaq Merger  Due to lot of Competitors, HP and Compaq Faced a Financial issues.  On September 04, 2001, HP and Compaq were announced to merge.  HP was to buy Compaq for US$ 24 billion in stock in the biggest ever deal in the history of the computer industry.  The merged entity would have operations in more than 160 countries with over 145,000 employees.
  • 11.  The Shares of HP and Compaq are declined by 21.5% and 15.7% respectively in two days.  The pair lost US$ 13 billion in market capitalization in a couple of days.  In the next two weeks, HP's stock went down by another 17%, amidst a lot of negative comments about the merger from analysts and the company's competitors.  Finally it became as a Failure model.