MERGERS

& ACQUISITIONS

ByPrabhjot 112 Jaspreet 66 Mithun 82

Business Combination
Why Business Combine???

-Synergy
-Diversification -Growth -Eliminate Competition

B
C

MERGERS Amalgamation ACQUISITIONS

usiness

ombination

Takeovers

When two or more companies combines into one company may merge with existing co,

MERGER

form new company in India merger is called Amalgamation

Merging Companies are called

Amalgamating Companies

MERGER
New Company is called

Amalgamated Company

MERGER Merger through ABSORPTION

Merger through CONSOLIDATION

Merger Through Absorption

An Absorption is Combination of two or more companies into an existing company

All companies except one lose their identity

Example Absorption of Tata Fertilisers Ltd (TFL) by Tata Chemicals Ltd. (TCL) Tata Oil Mills Ltd. (TOMCO) with Hindustan Lever Ltd. (HLL)

Merger Through Consolidation

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

All companies are dissolved to form a new Company

Example
Hindustan Computers Ltd

+
Hindustan Instruments Ltd

+
Indian Software Co. Ltd

+
Indian Reprographic Ltd

=
Hindustan Computers Ltd(HCL)

TYPES OF MERGER
Horizontal Merger Vertical Merger Market-extension Merger Product-extension Merger Conglomeration

TYPES OF MERGER

1
Horizontal Merger

It refers to the merger of two companies who are direct competitors of one another. They serve the same market and sell the same product.
Example The formation of Brook Bond Lipton India Ltd. through the merger of Lipton India and Brook Bond The merger of Bank of Mathura with ICICI (Industrial Credit and Investment Corporation of India) Bank

TYPES OF MERGER

2 Vertical Merger

This type of merger involves a customer and a company or a supplier and a company merging. Imagine a bat company merging with a wood production company. This would be an example of the supplier merging with the producer and is the essence of vertical mergers.
Example Pixar & Disney

TYPES OF MERGER

3
Market-extension Merger

This involves the combination of two companies that sell the same products in different markets. A market-extension merger allows for the market that can be reached to become larger and is the basis for the name of the merger. Example- Dells Alienware Gaming Laptops

TYPES OF MERGER

Product-extension Merger It takes place between two business organizations that deal in products that are related to each other and operate in the same market. Companies which sell different products of a related category.

TYPES OF MERGER

Conglomeration
It refers to the merger of companies, which do not either sell any related products or cater to any related markets. Here, the two companies entering the merger process do not possess any common business ties. Example Tata-Sky

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..

Example
-Godrej Consumer Care bought Keyline Brands -Dabur acquired Balsara

TAKEOVERS
A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publically traded, the acquiring company will make an offer for the outstanding shares.

Types Of Takeovers
Friendly Takeover- Also commonly referred to as
negotiated takeover, a friendly takeover involves an acquisition of the target company through negotiations between the existing promoters and prospective investors. This kind of takeover is resorted to further some common objectives of both the parties.

 Hostile Takeover- A hostile takeover can happen

by way of any of the following actions: if the board rejects the offer, but the bidder continues to pursue it or the bidder makes the offer without informing the board beforehand.

Example- HP taking over COMPAQ

Why Should Firms Takeover???

To gain opportunities of market growth To seek gain benefits from economies of scale To gain a more dominant position in the market To acquire the skills or strengths of another firm to complement existing business To diversify its products or service range in the market

India's 11 largest M&A deals

Tata Steel-Corus: $12.2 billion Vodafone-Hutchison Essar: $11.1 billion Hindalco-Novelis: $6 billion Ranbaxy-Daiichi Sankyo: $4.5 billion ONGC-Imperial Energy: $2.8 billion NTT DoCoMo-Tata Tele: $2.7 billion HDFC Bank-Centurion Bank of Punjab: $2.4 billion Tata Motors-Jaguar Land Rover: $2.3 billion Suzlon-RePower: $1.7 billion RIL-RPL merger: $1.68 billion