Mergers & Aquisition

8/3/2019 Mergers & Aquisition

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Mergers Acquisitionsnd

Presented by

Rohan Nangia

BBA 3 B (morning)11714201710
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Mergers

&

Acquisitions
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business

combination

Mergers

Amalgamation

Acquisitions

Takeovers
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Merger

When two or more companies

combines into one company

may merge with existing co,

form new company

in India merger is calledAmalgamation


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Merger

Merging Companiesare called

Amalgamating

Companies

New Company iscalled

AmalgamatedCompany


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Merger

MergerThroughAbsorption

MERGERTHROUGHCONSOLIDATION


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Merger

MergerThroughAbsorption

An Absorption is Combination oftwo or more companies into an

existing company

All companies except one losetheir identity


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Western UnionBank Merged

WithIDBI

New Bank Of

India MergedWith PNB

Bank Of NewYork Merged

With MellonFinancial


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Merger

MergerThroughConsolidation

A consolidation is a combination of two or moreCompanies into a new Company

All companies are dissolved to form a new Company


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Merger

MergerThroughConsolidation

HindustanComputers Ltd

HindustanInstruments

Ltd

Indian SoftwareCo .Ltd

IndianReprographic

Ltd HCL LTD


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Mergers AcquisitionsndAcquisition

An Acquisition may be an act of acquiring

effective 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..


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Mergers AcquisitionsndAcquisition

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 companyRequire approval of Shareholders & C Govt.


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Dabur Pharma to acquire Thai company

Aditya Birla Group to acquire Trinethra

Chinas largest Bank to take overIndonesian Bank


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Mergers AcquisitionsndAcquisition & Takeover

When Acquisition is unfriendly or hostileIt may be called Takeover


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Mergers AcquisitionsndTactics to Defend Takeover..Merger

DivestitureCrown Jewels

Poison PillGreenmailWhite KnightGolden parachutes
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HorizontalMerger

VerticalMerger

ConglomerateMerger

FORMS OF MERGER


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MergerObjectives

Faster GrowthImproving Profitability

Managerial EffectivenessGaining Market Power

Leadership

Cost Reduction


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Are there any alternatives to Mergers or acquisitions?


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MergerAlternatives

Joint Venture

Strategic AllianceEliminating InefficientOperations

Productivity ImprovementHiring CapableManagers


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MOTIVES & BENEFITSOF

MERGERS

Limit CompetitionMarket PowerDiversificationGrowthEconomy of ScaleAccess to Foreign MarketResourcesDisplace existing Management

Circumvent Govt RegulationsAggressivenessDiversifying RiskProfitability
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MERGERS

Accelerated Growth

Expanding Existing MarketsEntering New Markets

Expand InternallyExpand ExternallyDeveloping Operating FacilitiesPrice Paid for Merger


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MERGERS

Enhanced Profitability

Economies of ScaleOperating EconomiesSynergy


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MERGERS

Reduction in Tax Liability

Carry forward Losses

Tax on Share


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MERGERS

Financial Benefits

Eliminating Financial Constraints

Deploying Surplus Cash

Enhancing Debt Capacity

Lowering Financial Costs


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MERGERS

Increased Market Power

Market Share

Bargaining Power

Technological Advancement

Pricing

Limiting Competition


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Steps inAnalysisOf

Mergers&Acquisitions

PlanningSearch &Screening

FinancialEvaluation

Mode ofMerger

Negotiation

Post

Merger
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27/35


Steps inAnalysisOf


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
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28/35


Steps inAnalysisOf


Search &

Screening

Where to look for candidatesIs it too large or smallEngaged in related or unrelated ActivityExport oriented or Local

Amenable or not amenable to merger
http://images.google.co.in/imgres?imgurl=http://www.recoverychronicles.com/MediaPR/_images/eNewsletter/35/merger.jpg&imgrefurl=http://www.recoverychronicles.com/Article.asp%3FID%3D35%26ArticleID%3D400&h=331&w=310&sz=102&hl=en&start=13&tbnid=KoVRIQhozWy9oM:&tbnh=119&tbnw=111&prev=/images%3Fq%3Dmerger%26svnum%3D10%26hl%3Den%26lr%3D%26sa%3DNhttp://images.google.co.in/imgres?imgurl=http://www.fenews.com/fen38/fen38_images/magnifying-glass.jpg&imgrefurl=http://www.fenews.com/fen38/inside_black_box/black_box.html&h=203&w=382&sz=27&hl=en&start=5&tbnid=qreCekVJe6gVLM:&tbnh=65&tbnw=123&prev=/images%3Fq%3Dmagnifying%2Bglass%26svnum%3D10%26hl%3Den%26lr%3Dhttp://images.google.co.in/imgres?imgurl=http://www.fenews.com/fen38/fen38_images/magnifying-glass.jpg&imgrefurl=http://www.fenews.com/fen38/inside_black_box/black_box.html&h=203&w=382&sz=27&hl=en&start=5&tbnid=qreCekVJe6gVLM:&tbnh=65&tbnw=123&prev=/images%3Fq%3Dmagnifying%2Bglass%26svnum%3D10%26hl%3Den%26lr%3Dhttp://images.google.co.in/imgres?imgurl=http://www.lawnproducts.com/stoneusa/steps/snapped%2520steps%25201.jpg&imgrefurl=http://www.lawnproducts.com/stoneusa/steps/steps.html&h=418&w=432&sz=33&hl=en&start=3&tbnid=rNLFzKmR1hAVnM:&tbnh=122&tbnw=126&prev=/images%3Fq%3Dsteps%26svnum%3D10%26hl%3Den%26lr%3Dhttp://images.google.co.in/imgres?imgurl=http://www.lawnproducts.com/stoneusa/steps/snapped%2520steps%25201.jpg&imgrefurl=http://www.lawnproducts.com/stoneusa/steps/steps.html&h=418&w=432&sz=33&hl=en&start=3&tbnid=rNLFzKmR1hAVnM:&tbnh=122&tbnw=126&prev=/images%3Fq%3Dsteps%26svnum%3D10%26hl%3Den%26lr%3Dhttp://images.google.co.in/imgres?imgurl=http://www.lawnproducts.com/stoneusa/steps/snapped%2520steps%25201.jpg&imgrefurl=http://www.lawnproducts.com/stoneusa/steps/steps.html&h=418&w=432&sz=33&hl=en&start=3&tbnid=rNLFzKmR1hAVnM:&tbnh=122&tbnw=126&prev=/images%3Fq%3Dsteps%26svnum%3D10%26hl%3Den%26lr%3Dhttp://images.google.co.in/imgres?imgurl=http://www.lawnproducts.com/stoneusa/steps/snapped%2520steps%25201.jpg&imgrefurl=http://www.lawnproducts.com/stoneusa/steps/steps.html&h=418&w=432&sz=33&hl=en&start=3&tbnid=rNLFzKmR1hAVnM:&tbnh=122&tbnw=126&prev=/images%3Fq%3Dsteps%26svnum%3D10%26hl%3Den%26lr%3Dhttp://images.google.co.in/imgres?imgurl=http://www.lawnproducts.com/stoneusa/steps/snapped%2520steps%25201.jpg&imgrefurl=http://www.lawnproducts.com/stoneusa/steps/steps.html&h=418&w=432&sz=33&hl=en&start=3&tbnid=rNLFzKmR1hAVnM:&tbnh=122&tbnw=126&prev=/images%3Fq%3Dsteps%26svnum%3D10%26hl%3Den%26lr%3Dhttp://images.google.co.in/imgres?imgurl=http://www.lawnproducts.com/stoneusa/steps/snapped%2520steps%25201.jpg&imgrefurl=http://www.lawnproducts.com/stoneusa/steps/steps.html&h=418&w=432&sz=33&hl=en&start=3&tbnid=rNLFzKmR1hAVnM:&tbnh=122&tbnw=126&prev=/images%3Fq%3Dsteps%26svnum%3D10%26hl%3Den%26lr%3Dhttp://images.google.co.in/imgres?imgurl=http://www.fenews.com/fen38/fen38_images/magnifying-glass.jpg&imgrefurl=http://www.fenews.com/fen38/inside_black_box/black_box.html&h=203&w=382&sz=27&hl=en&start=5&tbnid=qreCekVJe6gVLM:&tbnh=65&tbnw=123&prev=/images%3Fq%3Dmagnifying%2Bglass%26svnum%3D10%26hl%3Den%26lr%3Dhttp://images.google.co.in/imgres?imgurl=http://www.lawnproducts.com/stoneusa/steps/snapped%2520steps%25201.jpg&imgrefurl=http://www.lawnproducts.com/stoneusa/steps/steps.html&h=418&w=432&sz=33&hl=en&start=3&tbnid=rNLFzKmR1hAVnM:&tbnh=122&tbnw=126&prev=/images%3Fq%3Dsteps%26svnum%3D10%26hl%3Den%26lr%3Dhttp://images.google.co.in/imgres?imgurl=http://www.capitol-llc.com/images/mergers-acquisitions.jpg&imgrefurl=http://www.capitol-llc.com/merger-acquisitions.shtml&h=219&w=250&sz=12&hl=en&start=15&tbnid=aknrH0S_8Us3oM:&tbnh=97&tbnw=111&prev=/images%3Fq%3Dacquisitions%26svnum%3D10%26hl%3Den%26lr%3D%26sa%3DNhttp://images.google.co.in/imgres?imgurl=http://www.recoverychronicles.com/MediaPR/_images/eNewsletter/35/merger.jpg&imgrefurl=http://www.recoverychronicles.com/Article.asp%3FID%3D35%26ArticleID%3D400&h=331&w=310&sz=102&hl=en&start=13&tbnid=KoVRIQhozWy9oM:&tbnh=119&tbnw=111&prev=/images%3Fq%3Dmerger%26svnum%3D10%26hl%3Den%26lr%3D%26sa%3DNhttp://images.google.co.in/imgres?imgurl=http://www.defelsko.com/Dew/PTestc.gif&imgrefurl=http://www.defelsko.com/positestFR.htm&h=197&w=284&sz=21&hl=en&start=12&tbnid=5nDNlYYH-cZXJM:&tbnh=79&tbnw=114&prev=/images%3Fq%3Dmeasurement%26svnum%3D10%26hl%3Den%26lr%3Dhttp://images.google.co.in/imgres?imgurl=http://www.capitol-llc.com/images/mergers-acquisitions.jpg&imgrefurl=http://www.capitol-llc.com/merger-acquisitions.shtml&h=219&w=250&sz=12&hl=en&start=15&tbnid=aknrH0S_8Us3oM:&tbnh=97&tbnw=111&prev=/images%3Fq%3Dacquisitions%26svnum%3D10%26hl%3Den%26lr%3D%26sa%3DNhttp://images.google.co.in/imgres?imgurl=http://www.recoverychronicles.com/MediaPR/_images/eNewsletter/35/merger.jpg&imgrefurl=http://www.recoverychronicles.com/Article.asp%3FID%3D35%26ArticleID%3D400&h=331&w=310&sz=102&hl=en&start=13&tbnid=KoVRIQhozWy9oM:&tbnh=119&tbnw=111&prev=/images%3Fq%3Dmerger%26svnum%3D10%26hl%3Den%26lr%3D%26sa%3DN


29/35


Steps inAnalysisOf


Financial

Evaluation

Determining

EarningsCash flowsAreas Of RiskMaximum Price PayableHow to Finance Merger

CurrentMarket

Value

PremiumValue
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