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Mergers Acquisitions and Mergers Amalgamation Acquisitions Takeovers
Mergers Acquisitionsand
Mergers
Amalgamation
Acquisitions
Takeovers
Mergers Acquisitionsand
TATA LIKELY TO REVISE CORUS TAKEOVER OFFER
AMTEK AUTO RENEW BID TO ACQUIRE UK COMPANY
TATA GROUP IN RACE FOR DAEWOO ROMANIA
GE SNAPS UP SMITHS AEROSPACE FOR $4.8 BILLIONHINDUJAS ENTER RACE FOR HUTCH’S HTL STAKEIDBI BUYS 10% STAKE IN BAG FILMS RADIO UNITUS AIRWAYS RAISES BID FOR DELTA
Mergers Acquisitionsand
Merger
When two or more companies combines into one company
may merge with existing co,
form new company……
in India merger is called Amalgamation
Mergers Acquisitionsand
Merger
Merging Companies are called
AmalgamatingCompanies
New Company is called
AmalgamatedCompany
Mergers Acquisitionsand
Merger
MergerThroughAbsorption
MERGERTHROUGHCONSOLIDATION
Mergers Acquisitionsand
Merger
MergerThroughAbsorption
An Absorption is Combination of two or more companies into an existing company
All companies except one lose their identity
Mergers Acquisitionsand
Western UnionBank Merged
WithIDBI
New Bank OfIndia Merged
With PNB
Bank Of New York MergedWith Mellon
Financial
Mergers Acquisitionsand
Merger
MergerThroughConsolidation
A consolidation is a combination of two or more Companies into a new Company
All companies are dissolved to form a new Company
Mergers Acquisitionsand
Merger
MergerThroughConsolidation
HindustanComputers Ltd
HindustanInstruments
LtdIndian Software
Co .Ltd
IndianReprographic
Ltd HCL LTD
Mergers Acquisitionsand
Acquisition
An Acquisition may be an act of acquiringeffective control by one company over assetsor management of another company withoutany combination of companies……..
Companies may remain independent, separateBut there may be change in control ofCompanies……..
Mergers Acquisitionsand
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 Acquisitionsand
Dabur Pharma to acquire Thai company
Aditya Birla Group to acquire Trinethra
China’s largest Bank to take over Indonesian Bank
Mergers AcquisitionsandWE ARE LOOKING TO ACQUIRE
Pl. send proposals & contact details to [email protected]
HOSPITALSWe are leading business house with a reputed presence inIn health care sector in the country
We are likely to acquire medium to large sized hospitals inMetros, state capitals & tier 1 cities. They could be on outright purchase or long term lease. We are also open to Joint Ventures
Mergers Acquisitionsand
Acquisition & Takeover
When Acquisition is unfriendly or hostileIt may be called Takeover
Mergers AcquisitionsandMittal -Arcelor Case
Mittal Steel bids for Arcelor-27.1.06Mittal after Arcelor’s Cash -2.2.06Mittal and Arcelor seek Support-6.2.06Arcelor investors favour mittal but want more-15.2Arecelor offer sweet,hostality wanning-mittal 16.2Arecelor declared higher dividend than mittal-16.2Mittal Steel Launched formal take over-19.5Mittal raised bid before share holders meet-19.5A,lor to merge with Russian Company Severstal 26.5Mittal –Arcelor start talks -9.6Arecelor rejects mittal bid-12.6
Mergers AcquisitionsandMittal -Arcelor Case
•Mital woos Arcelor with 70% growth-13.6•Mittal may hike offer-21.6•Mittal Arcelor close to friendly deal-23.6•Mittal wins over more shareholders23.6•Arcelor gives in to Mittal-26.6•Did Mittal Yield too much-29.6•Arcelor,s largest S,holder reject Severstal - 30.6•Mittal Steel claims 92% shares of Arcelor -27.7•Mittal steel announces post merger plan-8.8•Merged Arcelor-Mittal named Mike Repley•As CEO OF US operations
Mergers AcquisitionsandTactics to Defend Takeover…..Merger
Divestiture Crown Jewels Poison Pill Greenmail White Knight Golden parachutes
Mergers Acquisitionsand
HorizontalMerger
VerticalMerger
ConglomerateMerger
FORMS OF MERGER
Mergers Acquisitionsand
MergerObjectives
Faster GrowthImproving ProfitabilityManagerial EffectivenessGaining Market PowerLeadershipCost Reduction
Mergers Acquisitionsand
Are there any alternatives to Mergers or acquisitions?
Mergers Acquisitionsand
MergerAlternatives
Joint VentureStrategic AllianceEliminating Inefficient OperationsProductivity ImprovementHiring Capable Managers
Mergers Acquisitionsand
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 Acquisitionsand
MOTIVES & BENEFITS OF MERGERS
Accelerated Growth
Expanding Existing MarketsEntering New MarketsExpand InternallyExpand ExternallyDeveloping Operating FacilitiesPrice Paid for Merger
Mergers Acquisitionsand
MOTIVES & BENEFITS OF MERGERS
Enhanced Profitability
Economies of ScaleOperating EconomiesSynergy
Mergers Acquisitionsand
MOTIVES & BENEFITS OF MERGERS
Reduction in Tax Liability
Carry forward Losses
Tax on Share
Mergers Acquisitionsand
MOTIVES & BENEFITS OF MERGERS
Financial Benefits
Eliminating Financial Constraints
Deploying Surplus Cash
Enhancing Debt Capacity
Lowering Financial Costs
Mergers Acquisitionsand
MOTIVES & BENEFITS OF MERGERS
Increased Market Power
Market Share
Bargaining Power
Technological Advancement
Pricing
Limiting Competition
Mergers Acquisitionsand
Steps inAnalysisOfMergers&Acquisitions
PlanningSearch &
ScreeningFinancial
EvaluationMode ofMerger
Negotiation
PostMerger
Mergers Acquisitionsand
Steps inAnalysisOfMergers&Acquisitions
Planning
Industry Data
Market GrowthCompetitionEase Of EntryCapital & LabourDegree of Regulation
Target Firm
Quality Of MgtMarket Share SizeCapital StructureProfitabilityProduction &MarketingCapabilities etc
Objective of AcquisitionsStrengths & WeaknessesBusiness Units-dropped or Added
Mergers Acquisitionsand
Steps inAnalysisOfMergers&Acquisitions
Search & Screening
Where to look for candidatesIs it too large or smallEngaged in related or unrelated ActivityExport oriented or LocalAmenable or not amenable to merger
Mergers Acquisitionsand
Steps inAnalysisOfMergers&Acquisitions
FinancialEvaluation
Determining
•Earnings•Cash flows•Areas Of Risk•Maximum Price Payable•How to Finance Merger
Current Market Value
PremiumValue
Mergers Acquisitionsand
Steps inAnalysisOfMergers&Acquisitions
Mode ofMerger
Regulations
Time frame
Resources
Degree of control
Assume hiddenliabilities
Mergers Acquisitionsand
Steps inAnalysisOfMergers&Acquisitions
Negotiation
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 Acquisitionsand
Steps inAnalysisOfMergers&Acquisitions
PostMerger
Check Hostility
Anticipate Problems
Solve Problems
Treat peopleWith Dignity
“Art of taking overCompany
Without overtakingIt”
Mergers Acquisitionsand
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 Created by Merger
Mergers Acquisitionsand
Economic Advantage
EA = VPQ - (VP + VQ)
Value Created by Merger
Mergers Acquisitionsand
New Bank Of India merged with Punjab National BankGlobal Trust Bank Taken over by OBCWestern United Bank taken over by IDBIInternational Data Management By HCL LtdChhabrias took over Shaw Wallace, Dunlop Ashok Leyland By HindujasSpensers By GoenkasVSNL by TataTata Tea Ltd Acquired Consolidated Coffee CompanyTomco with HLLTata Fertilizers Merged With Tata ChemicalsSundaram Clayton Merged With TVS-suzuki LtdMITTAL STEEL'S ACQUISITION OF ARCELOR
Few Mergers, Acquisitions, Take over
