Pop quiz 3 resultsFilip Grljević ½ bp Ana Grubišić 2 bpMateja Grgić 1bp Anamari Hušnjak 2 bpKristijan Keleminić 1 bp Stella Kević 2 bpIvana Hapač 1 bp Gabrijela Grubišić-Čabo 2 bpDora Jendriš 1bpNikolina Klasnić 1 bp Tina Horvat 3 bpMislav Ivanković 1 bp Lucija Horvat 3 bpValentina Guštin 1 bp Irena Jovičić 3 bpJurjević Nikolina 1 bp Matija Gregurić 3bpJuraj Juriša 1 bpJasmina Kalingar 1 bpEugen Klarić 1 bpDora Jelavić 1 bp

Red alert: many teams still haven’t submitted the action minutes from their meetings

Failing to submit the minutes at the latest on Monday (1 June)

diminishes your score

(your grade too)

2nd progress test

2nd progress test: Tuesday, 2 June, 2015– 08.00 – 09.00 (half the group)– 09.00 – 10.00 (half the group)

Test (topics): up to 40 points• Report (including graph description): up to 25 pointsNote: The report writing task will include a graph which should

be described in the Findings section of your report.

In the Findings section you should describe the graph according to the guidelines provided in the Graph description unit of RB.

For an example of a report writing task, please go to next slide:

Report writing + graph descriptionYour company is considering taking over Sunset PLC. On 20 May your Managing Director asked you to analyse the revenue and costs of Sunset PLC for the period between 2009 and 2015 and give your recommendation. Write a report and submit it by 26 May. You have obtained the financial information from Sunset’s annual reports. Invent any necessary details.

of Sunset Ltd.

2009 2010 2011 2012 2013 2014 2015

Financing capital: discuss opportunities & threats

• government subsidies

• bank loans

• issuing bonds

• issuing shares acquisitions: buyouts and takeovers

Why?

→ MK, p 105

to reinforce your position to reduce competitionto rationalize productionto diversify products/marketsto gain access to new technology...

Unit 21: Takeovers Pg 1

• How can companies use their profits?• Provide synonyms of acquire:

• Explain the difference between takeovers and mergers• Explain: supply chain vs.

Explain the difference between horizontal and vertical integration

• Explain the difference between forward and backward integration

• 1 Horizontal integration A enables cost savings2 Vertical integration B increases market share and reduces competition

attain, buy, get, purchase, take, take possession of

distribution chain

Unit 21: Takeovers Pg 1

• How can companies use their profits?• Provide synonyms of acquire:

attain, buy, get, purchase, take, take possession of• Explain the difference between takeovers and mergers• Explain: supply chain

vs. distribution chain• Explain the difference between horizontal and vertical

integration• Explain the difference between forward and backward

integration• 1 Horizontal integration A enables cost savings

2 Vertical integration B increases market share and reduces competition

Mergers (integrations) with:competitors =

distributors =

suppliers =

horizontal integration

forward integration

backward integration

vertical

Pg 2Pg 2: Explain the difference between a raid and

takeover bid (draft notes in the table and practice describing advantages and disadvantages of each)

Advantages Disadvantages

A raid

A takeover bid

● Explain the difference between a friendly and a hostile bid

Vocabulary• to bid (v irregular: bid, bid)

– to offer to pay a particular price for sth.The company is bidding 910p a share for control

of AB Ports... The bidder is interested in...

• a bid (n)– a price offered to buy sth. such as goods,

property, shares, bonds (Longman

BED)

Takeover bids:- unwanted / unsolicited / hostile<>friendly bid

Pg. 3

• Why do investment banks encourage companies to take over other companies?

Pg. 4

• Explain conglomerate• What does LBO stand for?• L _ _ _ _ _ _ _ d b _ _ _ _ _ s• Which globally famous Hollywood movie

involves a male character who specializes in LBOs?

• Do you remember what it is he is doing in the movie?

Pg. 4 cont.

• Explain: undervalued on the stock market

• Explain: market capitalization

• Explain: leveraged

• Explain: asset-stripping

• Why is the risk involved in LBOs small?

HW: Vocabulary, p 106 & complete

→Takeovers handout

→ LBO handout

What is missing?

• ~ between• ~ talks• ~ proposal• ~ agreement

• conglomerate ~• defensive ~

• horizontal ~• vertical ~

What is missing? MERGER

• a merger between similar banks but to merge with a similar bank

• merger talks• merger proposal n. + n.• merger agreement

merger ≈ integration• conglomerate merger • defensive merger • adj. + n.• horizontal merger / integration• vertical merger / integration

What is missing?

friendly ~hostile/unfriendly ~leveraged ~creeping ~~ battle~ bid What is missing?

leveraged ~ (LBO)employee/staff ~ management ~ (MBO)

What is missing? TAKEOVER

friendly takeoverhostile/unfriendly takeoverleveraged takeovercreeping takeovertakeover battletakeover bid What is missing? BUYOUT

leveraged buyout (LBO)employee/staff buyoutmanagement buyout (MBO)

Review: M & A

Mergers & acquisitions → asset stripping

Success → Retained earnings → Investments in R&D

Acquisition of other companies (t________, b______)akeovers uyouts

ConglomeratesMerger (integration with):companies in un___ ed fieldsrelat

LBOa________financed by debt

cquisition

stripped of assets & split up

TYPES

1. ACQUISITION / TAKEOVER

2. FRIENDLY TAKEOVER

3. HOSTILE TAKEOVER

4. MERGER

5. JOINT VENTURE

6. LEVERAGED BUYOUT

7. CORPORATE RAID

Cooperation of two or more individuals or

businesses, each agreeing to share profit, loss

and control, in a specific enterprise

Combining two or more companies to form a new

one

Corporate action in which a company buys most, if

not all, of the target company's ownership stakes

in order to assume control of the target firm 

JOINT VENTURE

MERGER

ACQUISITION / TAKEOVER

A takeover that a company being taken over agrees to.

A takeover that a company taken  over does not want and doesn’t agree to.

Acquisition of another company using borrowed money (bonds or loans) to meet the cost of acquisition. Often, the assets of the company being acquired are used as collateral for the loans in addition to the assets of the acquiring company.

FRIENDLY TAKEOVER

HOSTILE TAKEOVER

LEVERAGED BUYOUT

• buying a large number of shares in a corporation with undervalued assets to obtain voting rights to increase share value and thus generate a

massive return

VOCABULARY (look up)

to make a takeover bid to merge

to use the poison pill to take over

to find a white knight to acquire

CORPORATE RAID

Vocabulary, p 106

1 diversify

2 retail outlets

3 a controlling interest

4 listed companies

5 fees

6 conglomerates

7 synergy

8 market capitalization

9 subsidiaries

10 pension fund

Handouts check• Takeovers

1 reinforcing your company’s position

2 reducing competition

3 rationalizing production

4 optimizing the use of a plant or capital

5 diversifying products or markets

6 searching for synergy

7 grow 8 launch 9 buy

10 increase 11 persuade 12 sell

13 friendly 14 hostile 15 board

16 poison pill 17 white knight

Handouts check• LBOs

1b 2g 3d 4h 5f 6a 7e 8c

1 borrowed

2 financed

3 stock market value

4 asset-stripping

5 conglomerates