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MEMBERS KARAN SHETH PALAK PATNI PRATIK DOTIA ASHWINI SHETTY POOJA MEHTA KULDEEP MANDAIVYA
MEANING
Merger
A transaction where two firms agree to integrate their operations on a relatively co-equal basis because they have resources and capabilities that together may create a stronger competitive advantage. The combining of two or more companies, generally by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock Example: Company A+ Company B= Company C.
ACQUISITION
A transaction where one firms buys another firm with the intent of more effectively using a core competence by making the acquired firm a subsidiary within its portfolio of business It also known as a takeover or a buyout It is the buying of one company by another. In acquisition two companies are combine together to form a new company altogether. Example: Company A+ Company B= Company A.
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. The acquirer does not experience the dilution of ownership.
i. Increase Market Share. ii. Economies of scale iii. Profit for Research and development. iv. Benefits on account of tax shields like carried forward losses or unclaimed depreciation. v. Reduction of competition.
i. ii. iii.
Clash of corporate cultures Increased business complexity Employees may be resistant to change
i. ii. iii.
iv. v.
Increased market share. Increased speed to market Lower risk comparing to develop new products. Increased diversification Avoid excessive competition
i. Inadequate valuation of target. ii. Inability to achieve synergy. iii. Finance by taking huge debt.
TERMINOLOGIES
Asset Stripping Demerger or Spin off Black Knight Carve - out Poison Pill or Suicide Pill Defense Greenmail
Terminologies contd
Dawn Raid Grey Knight Macaroni Defense Management Buy In Hostile Takeover Management Buy Out
EXPERIENCES IN M&A
Learn from mistakes of others Define your objectives clearly Complete strategy to achieve goal. SWOT analysis for the merged business - a must Conservative attitude necessary at evaluation deskstrong arguments to support project Pick holes in strategy to get the best Will merged units be able to work at efficient / ideal level? Acquire expertise to interprete changes
STEEL co.
100 % stake in CORUS paying Rs 428/- per share
Image: B Mutharaman, Tata Steel MD; Ratan Tata, Tata chairman; J Leng, Corus chair; and P Varin, Corus CEO.
3. Hindalco-Novelis: $6 billion
June 2008 Aluminium and copper sector Hindalco Acquired Novelis Hindalco entered the Fortune-500 listing of world's largest companies by sales revenues
Image: Kumar Mangalam Birla (center), chairman of Aditya Birla Group.
Image: Malvinder Singh (left), ex-CEO of Ranbaxy, and Takashi Shoda, president and CEO of Daiichi Sankyo.
5. ONGC-Imperial Energy:$2.8billion
January 2009 Acquisition deal Imperial energy is a biggest chinese co. ONGC paid 880 per share to the shareholders of imperial energy ONGC wanted to tap the siberian market
Image: Imperial Oil CEO Bruce March.
Why India?
Dynamic government policies Corporate investments in industry Economic stability Ready to experiment attitude of Indian industrialists
i. Approval of Board of Directors ii. Information to the stock exchange iii. Application in the High Court iv. Shareholders and Creditors meetings v. Sanction by the High Court vi. Filing of the court order vii. Transfer of assets or liabilities viii. Payment by cash and securities
Maximum Waiting period:210 days from the filing of notice(or the order of the commission - whichever earlier).
Competition
Employees
Impact
Shareholders
No detailed investigating
Poor stake holder outreach
contd
Dabur completes merger of Fem Care Ebay India ties up with Adidas for FIFA World Cup. Abbott buys Piramal unit, tops table Eurocopter signs two joint ventures with Pawan Hans Mahindra to buy out Renaults stake in India, revive Logan sales.
Amongst BRIC Nations, India second most targeted country for Mergers & Acquisitions(2010):
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