MARKET LEADER 4 13 Takeovers and mergers MARKET LEADER 4 Unit 13 Takeovers and Mergers.

MARKET LEADER 4 13 Takeovers and mergers

MARKET LEADER 4

Unit 13

Takeovers and Mergers


4

1

2

3

5 Skills: Summarising in presentations

Starting up

Reading: Why mergers fail

Vocabulary: Describing takeovers and mergers

6 Case study: Group Bon Appetit PLC

Listening: Making acquisitions

111

1

Starting up

MARKET LEADER 4


Starting up-A

• Think of recent takeover or merger. What kinds of business were involved?

• Were both companies successful before it happened? What about now?

Starting up1


Starting up-B

• Think about the companies involved, their employees and the consumer.

• What are the advantages and disadvantages of:– (a) takeovers? – (b)mergers?

Starting up1


Starting up-B • Advantages of takeovers :

– The existing owner of a takeover target can realize the value of the company

– The taken over may get a new lease of life and gain better access to investment finance

– The acquiring company may gain new products to sell, and new markets to sell them in

– Benefits promised to shareholders often include lower costs, for example, lower overheads.

Starting up1


Starting up-B

• Disadvantages of takeovers: – Employees might become a part of the

redundant organizational personnel and will probably lose their jobs.

Starting up1


Starting up-C

• Studies show that 65% of mergers do not achieve their expected results. What are the reasons for this, do you think?– poor implementation– incompatible cultures

Starting up1


Starting up-C

• What do acquiring companies need to do in order to ensure success?

1. define how success will be measured

2. decide in advance which partner’s way of doing things will be adopted by the merged company

Starting up1


3. identify the advantages that the merged company has, ones that competitors will find it hard to copy

4. move quickly so that competitors do not have time to catch up and overtake.

Starting up1

Vocabulary

Describing takeovers and mergers



Vocabulary -A• 1. alliance• (f) an agreement between two or more

organisations to work together • 2. joint venture• (c) a business activity in which two or more

companies have invested together• 3. LBO (leveraged buyout)• (e) buying a company using a loan borrowed

against the assets of the company that’s being bought

2Vocabulary: Describing takeovers and mergers


Vocabulary -A• 4. MBO (management buyout)• (d) when a company’s top executives buy the

company they work for• 5. merger• (b) two or more companies joining to form a

larger company• 6. takeover/acquisition• (a) getting control of a company by buying

over 50%of its shares



Vocabulary -B

acquisition bid hostile launch

make stake take takeover

target


Make as many expressions as you can from the words in the box. For example, “to take a stake in a business”


Possible answers• acquisition bid

• bid target

• hostile acquisition

• hostile bid

• hostile takeover

• hostile takeover bid

• takeover bid • takeover target



• launch a bid • launch a hostile bid• launch a hostile takeover• launch a hostile takeover bid • make a bid• make a hostile bid • make a hostile takeover bid • make an acquisition • take a stake



Vocabulary -C

• 1. Investors dismissed Lafarge’s 3.4 billion………………………………………..

……………………………………………….

for Blue Circle yesterday, rejecting the offer on the grounds that it was ‘wholly inadequate’. (The Times)

2

take over bid /

hostile bid / acquisition bid



Vocabulary -C

• 2. The Boards of Glaxo Wellcome and Smithkline Beecham announce that they have unanimously agreed the terms of a proposed……………………………………

of equals to form Glaxo Smithkline. The new company is expected to generate substantial operational synergies. (Press release)

2

merger



Vocabulary -C

• 3. Sotheby’s, the auction house, is forming a……………………………………..with Amazon.com, the Internet retailer, to create a new on-line auction service. As part of the deal Amazon .com will……………………………………..in Sotheby’s. (The Economist)


joint venture

take a stake


Listening

Making acquisitions

• synergy: the additional effectiveness when two or more companies or people combine and work together tactic

• momentum: the ability to keep increasing, developing, or being more successful

• constraint: something that limits your freedom to do what you want

New words in listening materials

• hamstring: verb. to make someone unable to take the action they want or need to take, especially by restricting them:

• sycophant: someone who praises powerful people too much because they want to get something from them - used in order to show disapproval:


Listening -A

• 1. asset • (d) sth. belonging to a business that has value

or the power to earn money• 2. cost structure• (a) an organisation’s different costs and the

way they are related to each other• 3. integration • (e) combining two companies so that they can

work closely and effectively together

3Listening: Making acquisitions

Match these words with their meanings


Listening -A• 4. momentum• (f) The ability to keep increasing ,developing or

being more successful• 5. projections• (c) Calculations about, for example, what the

size, amount or rate of sth. will be in the future• 6. synergy• (b) advantage produced when two

organizations combine resources.



Listening -B

• 13.1 Listen to the first part of an interview with Nigel Portwood, President and Chief Executive Officer at Pearson Education. What essential preparatory steps should a company take to make a successful acquisition?



Listening -B

• Keys: – Ensure you have a clear strategy: this will

help you understand which companies are the most suitable targets for acquisition.

– If there is a suitable candidate, analyse its products, customers, sales and cost structure. Think about how you will invest in the company if you buy it, and what the financial consequences will be.



Listening -B

• Keys: – Work out how much the company is worth to

you and to its current owners. Work out how much more it will be worth to you because of the synergies you see (the benefits, not available to its current owners, that will result when it is combined with your own company).

– Work out the tactics of how to buy the company, including how to approach the owners and what price you will offer.



Listening -C

• 13.2 Now listen to the second part of the interviews. What three things need to be done to ensure the successful integration of a newly acquired business?



Listening -C

• Keys: – Plan what you are going to do when you

actually take ownership of the acquired company: how you are going to combine it with your own company in relation to its people(=managers and employees),facilities, its (other)assets and its customers, paying great attention to detail.



-- Keep the most important managers and staff in the acquired company on your side.

-- Move quickly and don’t lose momentum, because this creates uncertainty.


Listening -C• Keys:


Listening -D

• 13.3 Listen to the last part of the interviews. What are the five key questions for judging whether an acquisition has been successful?



Listening -D

• Keys: 1. Did the things that you expected to happen actually

happen?

2. Do you have a stronger competitive position as a result of the acquisition?

3. Did you get the cost savings that you expected?

4. Did the sales of the company continue as you had projected ?

5. Did you pay a sensible price?


MARKET LEADER 4

Reading

Why mergers fail

13 Takeovers and mergers

Language points of the text

merger

• noun. the joining together of two or more companies or organizations to form one larger one

• There has been a lot of talk about a merger with another leading bank.

• There is a merger between two of Britain's biggest trades unions.

in haste

• quickly or in a hurry:

• They left in haste, without even saying goodbye.

• Don't act in haste or be hot-headed.

apace

• adv. happening quickly:

• Expansion of the company has continued apace.

collapse (L.1)

• noun. a sudden failure in the way sth. works, so that it cannot continue:

• His business was in danger of collapse.• I thought that without me the whole project

would collapse.

implementation (L. 45)

• noun. the act of taking action or making changes that you have officially decided should happen

• the implementation of the peace plan• Very little has been achieved in the

implementation of the peace agreement signed last January.

take account of sth. (L. 48)• to consider or include particular facts or

details when making a decision or judgment about sth.:

• These figures do not take account of changes in the rate of inflation.

• A valuation of a smaller company must take account of its potential as a takeover target.

compatible (L. 75)

• adj. able to exist or be used together without causing problems

• Stephen's political views often weren't compatible with her own.

• Compatible couples generally share the same values and have similar lifestyles and goals.

be couched in sth (L. 77)

• to be expressed in a particular way:

• The offer was couched in legal jargon.

• The Declaration of Rights itself was couched in the language of political conservatism.

complementary (L. 80)• adj. complementary things go well

together, although they are usually different:

• Bain and McCaskill have complementary skills -- she is creative while he is highly organized.

• These two sides were not only complementary, they were in conflict.

metaphor (L. 90)

• noun. a way of describing sth. by referring to it as sth. different and suggesting that it has similar qualities to that thing

• That is not a metaphor, but the plain truth.

• She was a caged bird, to use her own metaphor, that had to break free.

tie the knot (L. 93)

• to get married

• They tied the knot in a romantic ceremony on the banks of a fjord (海湾 , 峡湾 ).

• Lots of big companies tied the knot, while some huge ones split up.

unconsummated (L. 98)

• adj. not successful

• The merger and acquisition is unconsummated.

• The plan has been proved to be unconsummated.

replicate (L. 149)

• verb. if you replicate someone's work, a scientific study etc, you do it again, or try to get the same result again:

• There is a need for further research to replicate these findings.

• Other scientists were unable to replicate the experiment.

odds (L. 160)

• noun. difficulties which make a good result seem very unlikely

• The odds are stacked against the young birds, especially in winter.

• Their job was to hold on despite impossible odds, in order to give the rest of the army time to strike.


Look at the exercises

4 Reading: Why mergers fail


MARKET LEADER 4

Reading -A

• Before you read the article, discuss these questions.

1. Whose shareholders benefit more in a takeover: those of the acquiring company or those of the one that is being acquired?

2. What is corporate culture? How might it affect the success or failure of a merger?



MARKET LEADER 4

Reading -B

• Read the article .Then answer these questions.

• 1. According to the article, whose shareholders benefit most in a takeover?

• 2. Why do so many mergers fail, according to the article?

• 3. What do acquiring companies need to do to ensure success?



Keys:

1. The shareholders who benefit most are those of the company that is being acquired.

2. Because of

--poor implementation

--incompatible cultures.

3. They need to

--define how success will be measured



--decide in advance which partner's way of doing things will be adopted by the merged company

-- identify the advantages that the merged company has, ones that competitors will find it hard to copy

--move quickly so that competitors do not have time to catch up and overtake.



MARKET LEADER 4

Reading –C: Choose the answer.

• 1. If your reputation is tarnished (line3), it is

(a) improved . (b) made worse.

• 2. If a merger suffers from poor implementation (lines 45-46),it is

(a) badly planned. (b) badly put into practice.


√

√


MARKET LEADER 4

Reading -C

• 3. If two organizations are compatible (lines 45-46), they are

(a) able to have a good relationship with each other.

(b) able to be divided into smaller groups.


√


MARKET LEADER 4

Reading -C

• 4. If you have complementary businesses (lines 80-81), are they businesses

(a) that offer different products in the same range.

(b) that offer free products.


√


MARKET LEADER 4

Reading -C

• 5. If you pay a premium (lines 107-108), you

(a) pay a higher than usual price.

(b) pay a lower than usual price.

• 6. If sth. is difficult to replicate (line 149), it is difficult

(a) to fine. (b) to copy.


√

√


MARKET LEADER 4

Reading -C

• 7. If the odds are stacked against you (line 160-161), you are

(a) likely to succeed.

(b) likely to fail.


√


MARKET LEADER 4

Reading -D

• 1. We need to make sure that the software is ………………………..with our computer applications.

• 2. Successful business people have a will to succeed even when the ……………………………them.


compatible

odds are stacked against


Reading -D

• 3. The new manager’s skills are…………………………to those of the existing team members.

• 4. We won’t be able to…………………………this level of sales next year.


complementary

replicate


SkillsSummarizing in presentations


Skills –A: Match the words to their meanings.1.pitfalls

2.rigorous

3.constraints

4.confidential

d) unexpected difficulties

b) thorough

a) things that limit your action

g) intended to be kept secret



Skills -A

5. hamstrung

6. sycophants

7. vying (for jobs)

8. collaborate c) to work together to

produce sth.

e) those who try to please

important people

f) competing for

h) prevented from

doing sth.



Skills -B

• 13.4 You will hear part of the final section of Jeremy’s presentation.

• He is giving a summary of common mistakes that managers make.

• Which of the four points in his presentation notes below does he not make?


Avoiding the pitfalls• Recognise the constraints• Pay attention to the cultural differences• Beware of the sycophants• Refer to core meaning / purpose


Skills -C

• 13.4 Study the Useful language box. Then listen again and tick the phrases that you hear.



Referring back• As I mentioned earlier in my presentation…• So as you were saying a few minutes ago…

Making points in threes• You really have to plan carefully, be rigorous in

your analysis and be flexible…• It’s a long process. It’s expensive. It can also be

very profitable.


√

√

√


Asking rhetorical questions• What are the advantages of the merger?• But what are the sort of things that the experts

forget generally?

Ordering• Firstly …, then …, finally …• There are three things in my mind and the first

thing is …


√

√


Using emotive language• Beware of the sycophants in your organization

…• It is commercial suicide …

Repetition• They’re going to be saying Yes! Yes! Yes!• It won’t work. It just won’t work.


√

√


Exemplifying• For instance …• … for example, caring as their primary task.

Asking for feedback• Is there any area I haven’t covered?• What’s missing?


√

√

Case study

Group Bon Appetit PLC



Task

• The directors of the venture capital firm Weinburg Investments, a major shareholder in Bon Appetit, are concerned about the threat of takeover. They have asked the directors of Bon Appetit to attend a meeting to consider:



Task

1. What actions must Bon Appetit take to avoid the threatened takeover by lcarus?

2. How can Bon Appetit improve the performance of Innovia Cafes?

3. Should Bon Appetit reconsider the proposed takeover of El Morito?

4. Should Bon Appetit’s overall business strategy be revised?



Task

• Form two groups:

– Directors of Bon Appetit

– Directors of Weinburg Investment

• Discuss the questions above. Then hold the meeting.



Stage 1: Background

• Group Bon Appetit PLC

• A large restaurant group takes over a chain of cafes, but the group’s share price then falls dramatically. Ss study the reasons for this, and make recommendations.



Stage 1: Background

Nature of takeover Bitterly fought


20%Shareholders’ premium over market price

Bon Appetit’s share price since the takeover

Peaked at 400p, fell to less than 50p, now 80p because of possible takeover of Bon Appetit by lcarus, a predator

MARKET LEADER 4 13 Takeovers and mergersStage 2:

Analyzing the information (Group A)

• Topics for Group A– Group Bon Appetit’s Chains– Turnover and profits– Debt and major shareholding

• Topics for Group B– Annual Report extract– Recent developments




• 1. Group Bon Appetit’s ChainsIts exiting chains, including for each chain– client profile– type of food– average amount spent in each

Planned expansion




• 2. Turnover and profitsFigures for each chain– Turnover (=sales) in last three years– Pre-tax profits over last three years




• 2. Turnover and profits– the percentage increase in turnover each year

for each chain– the percentage increase in profit each year for

each chain– profit as a percentage of turnover for each

year for each chain– total profit as a percentage of total turnover

for each year for all three chains6 Case study: Group Bon Appetit PLC



• Major trends:– Turnover of the Bon Appetit chain itself has

increased very quickly, with profit as a percentage of sales increasing even faster.

– Turnover has more than doubled at Innovia but its profit margin has fallen away very sharply.




• 3. Debt and major shareholding– the increased indebtedness of Group Bon

Appetit and the reason for it– the various shareholdings



Analyzing the information (Group B)

• Annual Report extract

Analyze the information in the same way as students in Group A



Analyzing the information (Group B)

• Recent developments– Bon Appetit and the Seashell doing well, but

Innovia in trouble--strong competition from Starbucks and others.

– Innovia’s managers complain about Bon Appetit’s bureaucratic management style--many have left.



• Stage3: Pooling the information

• Stage4: Preparing for the meeting



Writing

• Directors of Bon Appetit

• Write a report on your company for a financial group who are interested in investing in your business. Your report should give background information as well as information about recent developments. It should present the company in a positive light.



Review and Practice what you have Learnt.Review Practice Learnt.


LearnReview Practice

and what you haveReview Practice Learnt.

Date post:	19-Dec-2015
Category:	Documents
Upload:	erin-gibson
View:	284 times
Download:	4 times

MARKET LEADER 4 13 Takeovers and mergers MARKET LEADER 4 Unit 13 Takeovers and Mergers.

Documents