dramatic mergers

8/10/2019 Dramatic Mergers

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1) TATA ACQUIRES JAGUAR AND LAND ROVER

Reasons For The Deal:

Jaguar sales dropped 33% in the US and Europe in the first two

months of 2008.

Land Rover sales fell by 13% in the US and around 7.7% in

Europe during the same period.

Ford had lost 15.3 Billion dollars over the 2 year period and itresponded by shutting down its plants and slashing itsworkforce in North America by more than 40,000 workers.

Ford sold Jaguar and Land Rover as a package since the

engineering, purchasing and distribution of the two brandshave become interdependent as Ford tried to find efficienciesrunning the business. Jaguars and Land Rover aremanufactured at a common plant today.

The Deal:

Ford sells JLR to Tata for in March 2008 just over 1bn just afew months before a collapse in global demand in the

international car market Tata financed the takeover with $3bn of new long-term loans

The price paid by Tata was approximately half of what Ford

paid to buy Jaguar and Land Rover.; + Ford had continued toincur heavy losses in Jaguar as it failed to turn the businessaround.

The deal took over a year to agree which may have helped

with the post-merger integration. Tata 1ecognized that itwould continue to need support from Ford who are a main

supplier of car components to the two brands. No significant change proposed to the businesses by Tata. They

claimed that staff, trade unions and the UK government hadbeen kept informed about the proposed takeover andsupported the move.

The deal has been endorsed by trade unions, which secured acommitment from Tata to continue with JLRs production plans

until the end of 2011. This includes development of newmodels.


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2) COMCAST TIME WARNER CABLE

Background:

On November 22, 2013, it was widely reported that Comcast wasseeking advice on a possible bid for Time Warner Cable.CharterCommunications was also thinking of making an offer. Charter madea total of three attempts to buy Time Warner, offering $37.4 billionon January 13, 2014. Comcast's $45.2 billion offer effectively wonComcast the bidding war, though Charter continued to challenge theacquisition by forecasting difficulties with the regulatory reviewprocess. By April 27, however, Charter had backed off its oppositionto the deal after reaching a deal with Comcast in which Charter will

acquire a portion of Time Warner Cable's subscribers.

Description:

Under the form of the deal,Comcast would acquireTime WarnerCable by exchanging each of Time Warner Cable's current 284.9million shares for 2.875 shares of Comcast's CMCSA stock. Inaddition, Comcast will sell 1.4 million Time Warner Cable subscriberstoCharter Communications for about $7.3 billion. Comcast wouldalso divest 2.5 million subscribers to a new public company which

will be owned 66% by Comcast shareholders, and 33% by Charter,which will manage its network and customers. Finally, Comcast andCharter will swap about 1.6 million subscribers with each other.

Opposition:

Prominent critics of the deal include technology expertSusan P.Crawford,U.S. senatorAl Franken of Minnesota, the city ofLexington,Kentucky,the city ofWorcester, Massachusetts,and U.S.representativeJohn Conyers of Michigan.

Public opinion on the merger is generally negative. A March 2014Reuters/Ipsos poll found that 52% of Americans believed the dealwas bad for consumers, while 22% thought it would be beneficial. AnApril 2014 poll conducted byConsumer Reports found that themerger was opposed by 56% of the public and supported by 11%,with 32% having no opinion, with 74% of respondents agreeing thata merger "will result in higher Internet and cable prices foreveryone."A coalition of 56 consumer-advocacy and public interestgroups have expressed opposition to the merger, including both the

Writers Guild of America, East andWriters Guild of America, West,theMedia Alliance,Public Knowledge,and theParents Television
http://en.wikipedia.org/wiki/Charter_Communicationshttp://en.wikipedia.org/wiki/Charter_Communicationshttp://en.wikipedia.org/wiki/Comcasthttp://en.wikipedia.org/wiki/Time_Warner_Cablehttp://en.wikipedia.org/wiki/Time_Warner_Cablehttp://en.wikipedia.org/wiki/Charter_Communicationshttp://en.wikipedia.org/wiki/Susan_P._Crawfordhttp://en.wikipedia.org/wiki/Susan_P._Crawfordhttp://en.wikipedia.org/wiki/Al_Frankenhttp://en.wikipedia.org/wiki/Lexington,_Kentuckyhttp://en.wikipedia.org/wiki/Lexington,_Kentuckyhttp://en.wikipedia.org/wiki/Worcester,_Massachusettshttp://en.wikipedia.org/wiki/John_Conyershttp://en.wikipedia.org/wiki/Reutershttp://en.wikipedia.org/wiki/Ipsoshttp://en.wikipedia.org/wiki/Consumer_Reportshttp://en.wikipedia.org/wiki/Writers_Guild_of_America,_Easthttp://en.wikipedia.org/wiki/Writers_Guild_of_America,_Westhttp://en.wikipedia.org/wiki/Media_Alliancehttp://en.wikipedia.org/wiki/Public_Knowledgehttp://en.wikipedia.org/wiki/Parents_Television_Councilhttp://en.wikipedia.org/wiki/Parents_Television_Councilhttp://en.wikipedia.org/wiki/Public_Knowledgehttp://en.wikipedia.org/wiki/Media_Alliancehttp://en.wikipedia.org/wiki/Writers_Guild_of_America,_Westhttp://en.wikipedia.org/wiki/Writers_Guild_of_America,_Easthttp://en.wikipedia.org/wiki/Consumer_Reportshttp://en.wikipedia.org/wiki/Ipsoshttp://en.wikipedia.org/wiki/Reutershttp://en.wikipedia.org/wiki/John_Conyershttp://en.wikipedia.org/wiki/Worcester,_Massachusettshttp://en.wikipedia.org/wiki/Lexington,_Kentuckyhttp://en.wikipedia.org/wiki/Lexington,_Kentuckyhttp://en.wikipedia.org/wiki/Al_Frankenhttp://en.wikipedia.org/wiki/Susan_P._Crawfordhttp://en.wikipedia.org/wiki/Susan_P._Crawfordhttp://en.wikipedia.org/wiki/Charter_Communicationshttp://en.wikipedia.org/wiki/Time_Warner_Cablehttp://en.wikipedia.org/wiki/Time_Warner_Cablehttp://en.wikipedia.org/wiki/Comcasthttp://en.wikipedia.org/wiki/Charter_Communicationshttp://en.wikipedia.org/wiki/Charter_Communications


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The combination of Time Warner's broadband systems, mediacontents and subscriber base would create significantsynergies and strategic advantages with AOLs online brand,

Internet infrastructure and own subscriber base of 30 million

customers.For AOL, the merger was about technology.

AOL did not have a strategy for the next generation of internetusers who would require broadband access.

For AOLs Board of Directors, the portfolio of brands created

with the merger of the two companies would cover the fullspectrum of media entertainment and information.

AOL computer services technology and, over all, they assured

that the new business would be benefited from huge operating

synergies.

Transactions made since the AOL-Time Warner merger:

Wrestling was not in the network's best interest.

The fifty percent share in the cable channel Comedy Centralwas sold to Viacom.

AOL/Netscape's long running litigation against Microsoft wassettled out of court.

On March 31, 2006 Time Warner sold the Time Warner BookGroup to French publisher Hachette Livre, of the Lagarderegroup.

On February 23, 2006, Turner South, a regional sports andentertainment network in the south, was sold to News Corp'sFox Cable Networks group.

On September 12, 2006, Time Inc. announced that Time4Media, a group of men's interest magazines

In the summer of 2008, the Reader's Digest Association sold

QSP to Time Warner subsidiary Time Inc. for $110 million.

March 2009, Time Warner Cable was divested from thecompany in a spin-out.

On August 26, 2010, in Chile, Time Warner Company took thefull control of Chilevisin, a channel owned by Chile's PresidentSebastin Piera.

Reasons For Failure

One of the main reasons is that AOL basically never was anequal counterpart to Time Warner.


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At the time of the merger AOLs stocks were overvalued mainly

due to the Internet bubble.An estimated profit of $ 160 million evoked suspicion and

anger among shareholders.

Another reason why the merger failed is that in the time afterthe merger AOL and Time Warner failed to implement theirvisions and communicate them.

They even lacked the ability to recognize new trends in thedigital industry.

The main trends AOL Time Warner missed was the importanceof highly personalized web services.

A final reason for the failure is the fact that AOL and TimeWarner were not able to encourage a climate within the

companies to initiate the synergies that were proposed.

4) DISNEY PIXAR

Pre Acquisition Structure:

Disney Pixar were in a partnership agreement since 1991After the success of toy story, Disney- Pixar had a co-

production agreement in 1997

Post Acquisition Structure

Disney acquired Pixar for approximately $7.4 billion

in an all-stock deal.

The acquisition was completed May 5, 2006

Steve Jobs, who was the majority shareholder ofPixar with 50.1% became Disney's largest individualShare holder with 7%

Conditions were laid out as part of the deal toensure that Pixar remained a separate entity,Pixar name was to continue

Branding of films made post-merger would be"Disney-Pixar"

Acquisition Why?

The four main reasons for making an acquisitioninclude:


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To acquire complementary products, in order to

broaden the line

To acquire new markets or distribution channels

To acquire additional mass, and benefit from

economies of scale To acquire technology, to complement or replace the

currently used one

Factors Leading Towards Acquisition

Losses arising due to online ventures

Problems with management of Disney led Pixar to step downand also led to conflicts

Problems due to Toy Story 2 after its theatrical release.

Problem related to the sequel of Toy

Story 3.

Personal grievances between Jobs and Eisner

Changes After The Relationship

In march 2005, the Disney Board elected Iger as Companys

CEO.

Iger asked for Disneys content to be distributed over the

internet through iTunes.

In Oct 2005 Iger and Jobs signed a deal to sell TV showsthrough iTunes.

Started with Desperate Housewives and lost.

The acquisition gave Disney ownership of the worlds mostfamous computer animation studio and its talent.

The timing was also perfect for Disney as its own animation

films were failing.

The deal brought the technology co. Apple closer to Disney.

For Pixar it was a good move to face competitors like

DreamWorks & 20thcentury fox.

The deal gave Apple iTunes more video content to offer.

As of Jan 2006, Disney sold 1.5 million videos of TV serials.


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However, not long after this, Vodafone reneged on the deal andrebranded.Rebranding to VodafoneThe name Mannesmann ceased to exist in the telecommunication

branch soon after the deal withVodafone.As a result:MannesmannArcor becameArcor and subsequentlyVodafone D2D2 Mannesmannbecame D2 Vodafoneand subsequentlyVodafone D2
http://en.wikipedia.org/wiki/Vodafonehttp://en.wikipedia.org/wiki/Arcor_(telecommunications)http://en.wikipedia.org/wiki/Vodafone_D2http://en.wikipedia.org/wiki/Vodafone_D2http://en.wikipedia.org/wiki/Vodafone_D2http://en.wikipedia.org/wiki/Vodafone_D2http://en.wikipedia.org/wiki/Arcor_(telecommunications)http://en.wikipedia.org/wiki/Vodafone

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