PPT of Merger and Acquisition

Shiver katal 13MBA1253

Merger A merger refers to a combination of two or

more companies, usually of not greatly disparate size, into one company.

A merger involves the mutual decision of two companies to combine and become one entity; it can be seen as a decision made by two "equals".

Merger refers to a situation when two or more existing firms combine together andform a new entity.

Types of Merger Horizontal MergerHorizontal mergers are those mergers where

the companies manufacturing similar kinds of commodities or running similar type of businesses merge with each other.

Examples of horizontal mergerLipton India and Brooke Bond.

Bank of Madura with ICICI Bank.

BSES Ltd with Orissa Power Supply Company.

Associated Cement Companies Ltd with Damodar Cement.

Vertical MergerA merger between two companies producing

different goods or servicesExamples:-Time Warner cable operation- Turner CorporationPixar-Disney Merger

CONGLOMERATE MERGER

Conglomerate mergers take place when the two firms operate in different industries.

Types of conglomerate mergers:

1.Pure conglomerate mergers involve firms with nothing in common.

2. Mixed conglomerate mergers involve firms that are looking for product extensions or market extensions.

ExampleWalt Disney Company and the American

Broadcasting Company.

AmalgamationAmalgamation signifies the transfers of all

are some part of assets and liabilities of one or more than one existing company or two or more companies to a new company.

AcquisitionWhen one company takes over another and clearly

established itself as the new owner, the purchase is called an acquisition.

Acquisition is generally considered negative in nature

Acquisitions

Importance of mergerGrowth and diversificationSynergyFund raisingIncreased managerial skill/technologyTax considerationIncreased ownership liquidityDefense against takeovers

Challenges to mergers