Mergers and Acquisitions

ASHLEY VARGHESEPEEYUSH PAVANANLINSON K.C.SRI PRASHANTHA BHATVICTOR

AN OVERVIEW…

• ACQUISITION: When one company takes over another and clearly establishes itself as the new owner, the purchase is called an acquisition. From a legal point of view, the target company ceases to exist, the buyer "swallows" the business and the buyer's stock continues to be traded.

• Ex: ThumsUp, Cocacola

• MERGER: A merger happens when two firms agree to go forward as a single new company rather than remain separately owned and operated. This kind of action is more precisely referred to as a "merger of equals".

• Ex: Glaxo Wellcome and SmithKline Beecham,

Why M&A?

• Economies Of Scale.

• Increased revenue or market share.

• Synergy

• Taxation

Types of Mergers

• Horizontal Merger– Combination of two or more firms operating in

the same stage of production.• Ex : Merger of RPL with RIL in the year 2009.

• Vertical Merger– Combination of two firms that operate in different

stages of production.• Ex : Maersk Logistics & Damco merge on June 2009

• Conglomerate Merger– Combination of two or more firms which are

unrelated lines of business.• Ex : Merger of Infovision and Serco Group on Nov 2008.

Types of Mergers

Types of Acquisition

• Friendly Acquisition– The acquisition of a target company that is willing to

be taken over.• Ex : IBM acquires Daksh e-Services on May 2004.

• Hostile Acquisition– Target has no desire to be acquired and actively

rebuffs the acquirer and refuses to provide any confidential information.• Ex : Kraft acquires Cadbury on 19 Jan 2010 for $18.9 bn

ARCELOR MITTAL-MERGER

• ARCELOR- ARBED, ACERALIA & USINOR. (2001)

• MITTAL STEEL-LNM & ISPAT INTERNATIONAL (2004)

• ARCELOR MITTAL- JUNE 2006.

AFTER MERGER -

• WORLD’S NO.1 steel company

• 3,30,000 employees & 60 countries.

• PRODUCTION CAPACITY- 113 m tones.

• Combined revenue 62.2 bn Euro.

Kraft & Cadburys

• OfferKraft Foods is proposing an offer for Cadbury Plc. of 300 pence in cash and 0.2589 new Kraft Foods shares per Cadbury share. This values each Cadbury share at 745 pence and values the entire issued share capital of Cadbury at £10.2 billion.

• DealCadbury ordinary share at 840 pence and each Cadbury ADS at 33.60 and valued the entire issued share capital of �Cadbury at 11.9 billion (approximately $19.4 billion).�

This is an acquisition .the deal fell through in January 2010 for a total of £11.9billion

CONCLUSION

• In the recent time, most companies are going for expansion through mergers and acquisition.

• By M&A companies enjoy improved operating performance thanks to improved management redesigning.

• Investors can take comfort in the idea that a M&A will deliver enhanced market power.

CONCLUSION