Description
Mergers and acquisitions (abbreviated M&A) is an aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or new location, without creating a subsidiary, other child entity or using a joint venture.
Mergers
and
Acquisitions
business
c
ombination
Mergers
and
Acquisitions
Why Business Combination? Forms Of Business Combination
Mergers
and
Acquisitions
Mergers
business
Amalgamation
combination
Acquisitions Takeovers
Mergers
and
Acquisitions
?AI & IA TO MERGE IN APRIL ?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 BILLION ?HINDUJAS ENTER RACE FOR HUTCH’S HTL STAKE ?IDBI BUYS 10% STAKE IN BAG FILMS RADIO UNIT ?US AIRWAYS RAISES BID FOR DELTA
Mergers
and
Acquisitions
?When two or more companies
combines into one company ?may merge with existing co,
Merger
?form new company…… ?in India merger is called Amalgamation
Mergers
and
Acquisitions
Merging Companies are called
Amalgamating Companies
Merger
New Company is called
Amalgamated Company
Mergers
and
Acquisitions
Merger Through Absorption
Merger
MERGER THROUGH CONSOLIDATION
Mergers
and
Acquisitions
Merger Through Absorption
?An Absorption is Combination of two or more companies into an existing company ?All companies except one lose their identity
Merger
Mergers
and
Acquisitions
Western Union Bank Merged With IDBI
New Bank Of India Merged With PNB
Bank Of New York Merged With Mellon Financial
Mergers
and
Acquisitions
Merger Through Consolidation
Merger
A consolidation is a combination of two or more Companies into a new Company
All companies are dissolved to form a new Company
Mergers
and
Acquisitions
Merger Through Consolidation
Hindustan Computers Ltd
Merger
Hindustan Instruments Ltd
Indian Software Co .Ltd
Indian Reprographic Ltd
HCL LTD
Mergers
and
Acquisitions
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……..
Mergers
and
Acquisitions
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
and
Acquisitions
Dabur Pharma to acquire Thai company
Aditya Birla Group to acquire Trinethra
China’s largest Bank to take over Indonesian Bank
Acquisitions WE ARE LOOKING ACQUIRE andTO Mergers
HOSPITALS
We are leading business house with a reputed presence in In health care sector in the country We are likely to acquire medium to large sized hospitals in Metros, state capitals & tier 1 cities. They could be on out right purchase or long term lease. We are also open to Joint Ventures
Pl. send proposals & contact details to [email protected]
Mergers
and
Acquisitions
Acquisition & Takeover
When Acquisition is unfriendly or hostile It may be called Takeover
Acquisitions Mittal -Arcelor and Case Mergers
Mittal Steel bids for Arcelor-27.1.06 Mittal after Arcelor’s Cash -2.2.06 Mittal and Arcelor seek Support-6.2.06 Arcelor investors favour mittal but want more-15.2 Arecelor offer sweet,hostality wanning-mittal 16.2 Arecelor declared higher dividend than mittal-16.2 Mittal Steel Launched formal take over-19.5 Mittal raised bid before share holders meet-19.5 A,lor to merge with Russian Company Severstal 26.5 Mittal –Arcelor start talks -9.6 Arecelor rejects mittal bid-12.6
Acquisitions Mittal -Arcelor and Case Mergers
•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
Tactics to Defend Acquisitions andTakeover…..Merger Mergers
Divestiture Crown Jewels Poison Pill Greenmail White Knight Golden parachutes
Mergers
and
Acquisitions
FORMS OF MERGER
Horizontal Merger
Vertical Merger
Conglomerate Merger
Mergers
and
Acquisitions
Merger Objectives
?Faster Growth ?Improving Profitability ?Managerial Effectiveness ?Gaining Market Power ?Leadership ?Cost Reduction
Mergers
and
Acquisitions
Are there any alternatives to Mergers or acquisitions?
Mergers
and
Acquisitions
Merger
Alternatives
?Joint Venture ?Strategic Alliance ?Eliminating Inefficient Operations ?Productivity Improvement ?Hiring Capable Managers
Mergers
and
Acquisitions
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
and
Acquisitions
Accelerated Growth
MOTIVES & BENEFITS
OF
MERGERS
Expanding Existing Markets Entering New Markets Expand Internally Expand Externally Developing Operating Facilities Price Paid for Merger
Mergers
and
Acquisitions
Enhanced Profitability
MOTIVES & BENEFITS
OF
MERGERS
Economies of Scale Operating Economies Synergy
Mergers
and
Acquisitions
Reduction in Tax Liability
MOTIVES & BENEFITS
OF
MERGERS
Carry forward Losses Tax on Share
Mergers
and
Acquisitions
Financial Benefits
Eliminating Financial Constraints
MOTIVES & BENEFITS
OF
Deploying Surplus Cash Enhancing Debt Capacity Lowering Financial Costs
MERGERS
Mergers
and
Acquisitions
Increased Market Power
Market Share
MOTIVES & BENEFITS
OF
Bargaining Power
MERGERS
Technological Advancement
Pricing
Limiting Competition
Mergers
and
Acquisitions
Planning
Steps in Analysis Of Mergers & Acquisitions
Search & Screening Financial Evaluation Mode of Merger Negotiation
Post Merger
Mergers
and
Acquisitions
Steps in Analysis Of Mergers & Acquisitions
Planning
?Objective of Acquisitions ?Strengths & Weaknesses ?Business Units-dropped or Added
Industry Data
Target Firm
Market Growth Competition Ease Of Entry Capital & Labour Degree of Regulation
Quality Of Mgt Market Share Size Capital Structure Profitability Production &Marketing Capabilities etc
Mergers
Search & Screening
Steps in Analysis Of Mergers & Acquisitions
and
Acquisitions
?Where to look for candidates ?Is it too large or small ?Engaged in related or unrelated Activity ?Export oriented or Local ?Amenable or not amenable to merger
Mergers
Financial Evaluation
Steps in Analysis Of Mergers & Acquisitions
and
Acquisitions
Determining
•Earnings •Cash flows •Areas Of Risk •Maximum Price Payable •How to Finance Merger
Current Market Value
Premium Value
Mergers
Mode of Merger
Steps in Analysis Of Mergers & Acquisitions
and
Acquisitions
Regulations
Time frame Resources Degree of control Assume hidden liabilities
Mergers
Negotiation
Steps in Analysis Of Mergers & Acquisitions
and
Acquisitions
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
Post Merger
Steps in Analysis Of Mergers & Acquisitions Check Hostility
and
Acquisitions
Anticipate Problems Solve Problems Treat people With Dignity
“Art of taking over Company Without overtaking It”
Mergers
and
Acquisitions
Value Created by Merger
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 and Acquisitions Mergers
Economic Advantage
EA = VPQ - (VP + VQ)
Few Mergers, Acquisitions, Take over and Acquisitions Mergers
New Bank Of India merged with Punjab National Bank Global Trust Bank Taken over by OBC Western United Bank taken over by IDBI International Data Management By HCL Ltd Chhabrias took over Shaw Wallace, Dunlop Ashok Leyland By Hindujas Spensers By Goenkas VSNL by Tata Tata Tea Ltd Acquired Consolidated Coffee Company Tomco with HLL Tata Fertilizers Merged With Tata Chemicals Sundaram Clayton Merged With TVS-suzuki Ltd
MITTAL STEEL'S ACQUISITION OF ARCELOR
doc_524314173.ppt
Mergers and acquisitions (abbreviated M&A) is an aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or new location, without creating a subsidiary, other child entity or using a joint venture.
Mergers
and
Acquisitions
business
c
ombination
Mergers
and
Acquisitions
Why Business Combination? Forms Of Business Combination
Mergers
and
Acquisitions
Mergers
business
Amalgamation
combination
Acquisitions Takeovers
Mergers
and
Acquisitions
?AI & IA TO MERGE IN APRIL ?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 BILLION ?HINDUJAS ENTER RACE FOR HUTCH’S HTL STAKE ?IDBI BUYS 10% STAKE IN BAG FILMS RADIO UNIT ?US AIRWAYS RAISES BID FOR DELTA
Mergers
and
Acquisitions
?When two or more companies
combines into one company ?may merge with existing co,
Merger
?form new company…… ?in India merger is called Amalgamation
Mergers
and
Acquisitions
Merging Companies are called
Amalgamating Companies
Merger
New Company is called
Amalgamated Company
Mergers
and
Acquisitions
Merger Through Absorption
Merger
MERGER THROUGH CONSOLIDATION
Mergers
and
Acquisitions
Merger Through Absorption
?An Absorption is Combination of two or more companies into an existing company ?All companies except one lose their identity
Merger
Mergers
and
Acquisitions
Western Union Bank Merged With IDBI
New Bank Of India Merged With PNB
Bank Of New York Merged With Mellon Financial
Mergers
and
Acquisitions
Merger Through Consolidation
Merger
A consolidation is a combination of two or more Companies into a new Company
All companies are dissolved to form a new Company
Mergers
and
Acquisitions
Merger Through Consolidation
Hindustan Computers Ltd
Merger
Hindustan Instruments Ltd
Indian Software Co .Ltd
Indian Reprographic Ltd
HCL LTD
Mergers
and
Acquisitions
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……..
Mergers
and
Acquisitions
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
and
Acquisitions
Dabur Pharma to acquire Thai company
Aditya Birla Group to acquire Trinethra
China’s largest Bank to take over Indonesian Bank
Acquisitions WE ARE LOOKING ACQUIRE andTO Mergers
HOSPITALS
We are leading business house with a reputed presence in In health care sector in the country We are likely to acquire medium to large sized hospitals in Metros, state capitals & tier 1 cities. They could be on out right purchase or long term lease. We are also open to Joint Ventures
Pl. send proposals & contact details to [email protected]
Mergers
and
Acquisitions
Acquisition & Takeover
When Acquisition is unfriendly or hostile It may be called Takeover
Acquisitions Mittal -Arcelor and Case Mergers
Mittal Steel bids for Arcelor-27.1.06 Mittal after Arcelor’s Cash -2.2.06 Mittal and Arcelor seek Support-6.2.06 Arcelor investors favour mittal but want more-15.2 Arecelor offer sweet,hostality wanning-mittal 16.2 Arecelor declared higher dividend than mittal-16.2 Mittal Steel Launched formal take over-19.5 Mittal raised bid before share holders meet-19.5 A,lor to merge with Russian Company Severstal 26.5 Mittal –Arcelor start talks -9.6 Arecelor rejects mittal bid-12.6
Acquisitions Mittal -Arcelor and Case Mergers
•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
Tactics to Defend Acquisitions andTakeover…..Merger Mergers
Divestiture Crown Jewels Poison Pill Greenmail White Knight Golden parachutes
Mergers
and
Acquisitions
FORMS OF MERGER
Horizontal Merger
Vertical Merger
Conglomerate Merger
Mergers
and
Acquisitions
Merger Objectives
?Faster Growth ?Improving Profitability ?Managerial Effectiveness ?Gaining Market Power ?Leadership ?Cost Reduction
Mergers
and
Acquisitions
Are there any alternatives to Mergers or acquisitions?
Mergers
and
Acquisitions
Merger
Alternatives
?Joint Venture ?Strategic Alliance ?Eliminating Inefficient Operations ?Productivity Improvement ?Hiring Capable Managers
Mergers
and
Acquisitions
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
and
Acquisitions
Accelerated Growth
MOTIVES & BENEFITS
OF
MERGERS
Expanding Existing Markets Entering New Markets Expand Internally Expand Externally Developing Operating Facilities Price Paid for Merger
Mergers
and
Acquisitions
Enhanced Profitability
MOTIVES & BENEFITS
OF
MERGERS
Economies of Scale Operating Economies Synergy
Mergers
and
Acquisitions
Reduction in Tax Liability
MOTIVES & BENEFITS
OF
MERGERS
Carry forward Losses Tax on Share
Mergers
and
Acquisitions
Financial Benefits
Eliminating Financial Constraints
MOTIVES & BENEFITS
OF
Deploying Surplus Cash Enhancing Debt Capacity Lowering Financial Costs
MERGERS
Mergers
and
Acquisitions
Increased Market Power
Market Share
MOTIVES & BENEFITS
OF
Bargaining Power
MERGERS
Technological Advancement
Pricing
Limiting Competition
Mergers
and
Acquisitions
Planning
Steps in Analysis Of Mergers & Acquisitions
Search & Screening Financial Evaluation Mode of Merger Negotiation
Post Merger
Mergers
and
Acquisitions
Steps in Analysis Of Mergers & Acquisitions
Planning
?Objective of Acquisitions ?Strengths & Weaknesses ?Business Units-dropped or Added
Industry Data
Target Firm
Market Growth Competition Ease Of Entry Capital & Labour Degree of Regulation
Quality Of Mgt Market Share Size Capital Structure Profitability Production &Marketing Capabilities etc
Mergers
Search & Screening
Steps in Analysis Of Mergers & Acquisitions
and
Acquisitions
?Where to look for candidates ?Is it too large or small ?Engaged in related or unrelated Activity ?Export oriented or Local ?Amenable or not amenable to merger
Mergers
Financial Evaluation
Steps in Analysis Of Mergers & Acquisitions
and
Acquisitions
Determining
•Earnings •Cash flows •Areas Of Risk •Maximum Price Payable •How to Finance Merger
Current Market Value
Premium Value
Mergers
Mode of Merger
Steps in Analysis Of Mergers & Acquisitions
and
Acquisitions
Regulations
Time frame Resources Degree of control Assume hidden liabilities
Mergers
Negotiation
Steps in Analysis Of Mergers & Acquisitions
and
Acquisitions
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
Post Merger
Steps in Analysis Of Mergers & Acquisitions Check Hostility
and
Acquisitions
Anticipate Problems Solve Problems Treat people With Dignity
“Art of taking over Company Without overtaking It”
Mergers
and
Acquisitions
Value Created by Merger
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 and Acquisitions Mergers
Economic Advantage
EA = VPQ - (VP + VQ)
Few Mergers, Acquisitions, Take over and Acquisitions Mergers
New Bank Of India merged with Punjab National Bank Global Trust Bank Taken over by OBC Western United Bank taken over by IDBI International Data Management By HCL Ltd Chhabrias took over Shaw Wallace, Dunlop Ashok Leyland By Hindujas Spensers By Goenkas VSNL by Tata Tata Tea Ltd Acquired Consolidated Coffee Company Tomco with HLL Tata Fertilizers Merged With Tata Chemicals Sundaram Clayton Merged With TVS-suzuki Ltd
MITTAL STEEL'S ACQUISITION OF ARCELOR
doc_524314173.ppt