Mergers

and

Acquisitions

Presented by
Rohan Nangia BBA 3 B (morning) 11714201710

Mergers

and

Acquisitions

Mergers & Acquisitions

Mergers

and

Acquisitions

Mergers

business

Amalgamation

combination

Acquisitions Takeovers

Mergers

and

Acquisitions

When two or more companies

combines into one company may merge with existing co,

Merger

form new company in India merger is called Amalgamation

Mergers

and

Acquisitions

Merging Companies are called

Amalgamating Companies

Merger
New Company is called

Amalgamated Company

Mergers

and

Acquisitions

Merger Through Absorption

Merger
MERGER THROUGH CONSOLIDATION

Mergers

and

Acquisitions

Merger Through Absorption

An Absorption is Combination of two or more companies into an existing company All companies except one lose their identity

Merger

Mergers

and

Acquisitions

Western Union Bank Merged With IDBI

New Bank Of India Merged With PNB

Bank Of New York Merged With Mellon Financial

Mergers

and

Acquisitions

Merger Through Consolidation

Merger

A consolidation is a combination of two or more Companies into a new Company

All companies are dissolved to form a new Company

Mergers

and

Acquisitions

Merger Through Consolidation

Hindustan Computers Ltd

Merger

Hindustan Instruments Ltd

Indian Software Co .Ltd

Indian Reprographic Ltd

HCL LTD

Mergers

and

Acquisitions

Acquisition
An Acquisition may be an act of acquiring effective control by one company over assets or management of another company without any combination of companies.. Companies may remain independent, separate But there may be change in control of Companies..

Mergers

and

Acquisitions

Acquisition
Obtaining Control over management of a Company MRTP ACT-at least 25% voting right of a Company Investment of more than 10% share into a company Require approval of Shareholders & C Govt.

Mergers

and

Acquisitions

Dabur Pharma to acquire Thai company

Aditya Birla Group to acquire Trinethra

Chinas largest Bank to take over Indonesian Bank

Mergers

and

Acquisitions

Acquisition & Takeover

When Acquisition is unfriendly or hostile It may be called Takeover

Tactics and Acquisitions Mergers to Defend Takeover..Merger

Divestiture Crown Jewels Poison Pill Greenmail White Knight Golden parachutes

Mergers

and

Acquisitions

FORMS OF MERGER

Horizontal Merger

Vertical Merger

Conglomerate Merger

Mergers

and

Acquisitions

Merger Objectives

Faster Growth Improving Profitability Managerial Effectiveness Gaining Market Power Leadership Cost Reduction

Mergers

and

Acquisitions

Are there any alternatives to Mergers or acquisitions?

Mergers

and

Acquisitions

Merger
Alternatives

Joint Venture Strategic Alliance Eliminating Inefficient Operations Productivity Improvement Hiring Capable Managers

Mergers

and

Acquisitions

MOTIVES & BENEFITS

OF

MERGERS

Limit Competition Market Power Diversification Growth Economy of Scale Access to Foreign Market Resources Displace existing Management Circumvent Govt Regulations Aggressiveness Diversifying Risk Profitability

Mergers

and

Acquisitions

Accelerated Growth

MOTIVES & BENEFITS

OF

MERGERS

Expanding Existing Markets Entering New Markets Expand Internally Expand Externally Developing Operating Facilities Price Paid for Merger

Mergers

and

Acquisitions

Enhanced Profitability

MOTIVES & BENEFITS

OF

MERGERS

Economies of Scale Operating Economies Synergy

Mergers

and

Acquisitions

Reduction in Tax Liability

MOTIVES & BENEFITS

OF

MERGERS

Carry forward Losses Tax on Share

Mergers

and

Acquisitions

Financial Benefits

Eliminating Financial Constraints

MOTIVES & BENEFITS

OF

Deploying Surplus Cash Enhancing Debt Capacity Lowering Financial Costs

MERGERS

Mergers

and

Acquisitions

Increased Market Power

Market Share

MOTIVES & BENEFITS

OF

Bargaining Power

MERGERS

Technological Advancement
Pricing

Limiting Competition

Mergers

and

Acquisitions

Planning
Steps in Analysis Of Mergers & Acquisitions

Search & Screening Financial Evaluation Mode of Merger Negotiation

Post Merger

Mergers
Planning
Steps in Analysis Of Mergers & Acquisitions

and

Acquisitions

Objective of Acquisitions Strengths & Weaknesses Business Units-dropped or Added

Industry Data
Target Firm
Market Growth Competition Ease Of Entry Capital & Labour Degree of Regulation
Quality Of Mgt Market Share Size Capital Structure Profitability Production &Marketing Capabilities etc

Mergers
Search & Screening
Steps in Analysis Of Mergers & Acquisitions

and

Acquisitions

Where to look for candidates Is it too large or small Engaged in related or unrelated Activity Export oriented or Local Amenable or not amenable to merger

Mergers
Financial Evaluation
Steps in Analysis Of Mergers & Acquisitions

and

Acquisitions

Determining
Earnings Cash flows Areas Of Risk Maximum Price Payable How to Finance Merger

Current Market Value

Premium Value

Mergers
Mode of Merger
Steps in Analysis Of Mergers & Acquisitions

and

Acquisitions

Regulations
Time frame Resources Degree of control Assume hidden liabilities

Mergers
Negotiation
Steps in Analysis Of Mergers & Acquisitions

and

Acquisitions

Your intentions should be to pay one dollar more than the value to the next highest bidder and an Amount that is less than the value to you

Mergers
Post Merger
Steps in Analysis Of Mergers & Acquisitions

and

Acquisitions

Check Hostility Anticipate Problems Solve Problems Treat people With Dignity

Art of taking over Company Without overtaking It

Mergers

and

Acquisitions

Value Created by Merger

Economic Advantage (EA) if VPQ > (VP + VQ)

Where

VPQ =Combined PV of merged firms

VP= Worth of Firm P VQ=Worth of firm Q

Value and by Merger Mergers Created Acquisitions

Economic Advantage
EA = VPQ - (VP + VQ)

Few Mergers, Acquisitions, Take over and Acquisitions Mergers

New Bank Of India merged with Punjab National Bank Global Trust Bank Taken over by OBC Western United Bank taken over by IDBI International Data Management By HCL Ltd Chhabrias took over Shaw Wallace, Dunlop Ashok Leyland By Hindujas Spensers By Goenkas VSNL by Tata Tata Tea Ltd Acquired Consolidated Coffee Company Tomco with HLL Tata Fertilizers Merged With Tata Chemicals Sundaram Clayton Merged With TVS-suzuki Ltd
MITTAL STEEL'S ACQUISITION OF ARCELOR