Group 6 presented information on mergers and acquisitions (M&A). The document defined mergers as combining two corporations where one maintains its identity, while acquisitions refer to purchasing assets or ownership of a company. It discussed the history, importance, process, differences between mergers and acquisitions, reasons for M&A failures, types of M&A, impacts, and legal provisions. M&A activity has increased in Nepal since 2004, with several bank and financial institution mergers occurring since 2011 when regulations were established to facilitate such combinations.

1. Group 6
Members
Shekhar Lal Amatya
Alok upadhayay
Pramila chapagain
MERGER AND ACQUISITION

2. • Introduction
• History
• Importance and process
• Different between M & A
• Why M & A Fall?
• Types of M & A
• Impact of M & A
• Legal and provisions approaches
• M & A Movement In Nepal
CONTENT

3. Merger:
• It is the combination of two or more than two corporations
maintaining the identity of one of the corporation.
• One new corporation will continue to exist & other losses its
currents existences. E.g. NIC Bank & Bank of Asia forming NIC
Asia Bank Ltd.
• One corporation will became the subsidies corporation of large
acquiring corporation.
Acquisition:
• It refers to the acquiring the ownership in the property.
• It is the process of acquiring the assets in the course of merger,
E.g. Prabhu Finance Acquired the business of Kist Bank.
INTRODUCTION

4. Period Name Feature
1893–1904 First Wave Horizontal mergers
1919–1929 Second Wave Vertical mergers
1955–1970 Third Wave Diversified conglomerate mergers
1974–1989 Fourth Wave
Co-generic mergers; Hostile takeovers;
Corporate Raiding
1993–2000 Fifth Wave Cross-border mergers, mega-mergers
2003–2008 Sixth Wave
Globalization, Shareholder Activism,
Private Equity, LBO
2014- Now Seventh Wave
HISTORY

5. • Product improvement
• Tax gain
• Diversification of risk
• Cost minimization
• Increase market share
• Mutual benefits
• Maximizing profits
• Access to global market
• Economy of scale
IMPORTANCE

6. MERGER PROCESS OR TERRACES OF
MERGER
• Preparation (generation of ideas on mergers)
– Merger objective and planning, development of target criteria to suit the objective,
identification of potential target for merger, appraisal to evaluate short listed
target candidate for merger and making plan of actions on post merger
integrations.
• Negotiation and transaction (merger agreement and MOU):
– Comprehensive financial and project analysis and appraisal of alternative
selected target.
– Making negotiations with logical strategy and tactical solution.
• Integrations (comprehensive correlations and synergy):
– Evaluating distinct similarities and differences under merger.
– Planning ultimately post merger integrations and ensuring implementation
capabilities speedily.

7. Mergers Acquisition
i. Merging of two organization in to one.
ii. It is the mutual decision.
iii. Merger is expensive than
acquisition(higher legal cost).
iv. Through merger shareholders can
increase their net worth.
v. It is time consuming and the company
has to maintain so much legal issues.
vi. Dilution of ownership occurs in merger.
i. Buying one organization by another.
ii. It can be friendly takeover or hostile
takeover.
iii. Acquisition is less expensive than
merger.
iv. Buyers cannot raise their enough
capital.
v. It is faster and easier transaction.
vi. vi. The acquirer does not experience
the dilution of ownership.
DIFFERENCE BETWEEN M&A

8. • In theory synergy i.e.2+2=5 sounds good,
but in practice things can go twisted.
• Historical trends show that roughly two thirds of big mergers will
disappoint on their own terms.
• Combining systems and merging departments may work, but revenue
and synergy may not be as expected.
WHY M & A FALL?

9. • Poor strategic fit, cultural and social differences, inadequate and
incomplete due diligence , poorly managed integration.
• Costly when synergies are not realized, premium paid may not
recaptured.
• Employee may be resistance to change.
• merger done by imitation of somebody else.
• Problems between top management.
• Inability to achieve synergy.
SOME REASONS BEHIND FAILED MERGERS

10. TYPES OF M & A
Merger
Conglomerate
Product
Extension
Mergers
Geographic
Market
Extension
Pure
Conglomerates
Mergers
Horizontal Vertical

11. • Impacts on employees
– Suffer from emotional and physical problems.
– Economics impact.
– Possibility of the Layoffs.
• Impact on management
– Higher job loss due to corporate culture clash.
– Higher level of stress.
• Impact on shareholders
– Gain profit of the acquired company.
– Suffer losses of the acquiring company.
• Impact on competition
– Increases in competition level.
– Among market player change of power.
IMPACT OF M&A

12. • Companies Act 2006
• BAFIA, NRB M&A Guideline/Policy
• Insurance Board M&A Guideline/Policy
M&A IN NEPAL

13. • Article 177 of the Company Act 2063 has provisioned for the amalgamation of company.
• Articles 68 and 69 of Bank and Financial Institutions Act 2063 have provisions for
amalgamations among bank and financial institutions.
• The monetary and fiscal policies of 2067/68 also initiated and encouraged for mergers and
acquisitions.
• NRB Board has recently passed the by laws regarding the M&A of banks and financial
institutions
• The by laws have provisioned various facilities to encourage amalgamations among banks
and financial institutions.
• It covers both voluntary as well as Forced mergers.
LEGAL AND PROVISIONS APPROACHES

14. • Merger begin in Nepal when the Eastern Electricity Corporation merge with Nepal
Electricity Authority.
• Standard Charted took Grind lays from ANZ Group.
• Recent merger began 10 years back in 2004.
• Laxmi Bank merged into Himalayan Saving Financial Company.
• On May 2011 NRB came up with a special rule to facilitate merger between BFIs.
• But many people still had doubt whether to merge or not.
• Soon merger spree started among BFIs.
• Birgunj finance & Himchuli Bikash Bank merge & form Himchuli & Birgunj Dev. Bank.
• The process get memorandum after that.
M & A MOVEMENT IN NEPAL