From mohammed salah sadek

1. BUSINESS
COMBINATIONS
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2. A business combination is bringing together two or more
Previously separate companies under Common control.
Control over a company gained by acquiring a majority of
he company's voting shares or by acquiring the net assets
of the other company.
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3. Types of Business Combinations
(a) Merger
A Company
A Company
B Company
3

4. Types of Business Combinations
(b) Consolidation
A Company
C Company
B Company
4

5. Types of Business Combinations
(c) Stock Acquisition
A Company A Company
B Company B Company
5

6. ABOUT KEANE INC:- ( THE ACQUIRING
COMPANY)
Industrial classification (services-Computer Program)
Keane is one of the world great information
technology services firms. In business since
1965, 50 offices in USA, Canada, and UK,
Keane helps his clients leverage technology to
optimize business performance through use
and management of information technology.
Keane has more than 8,200 employees and
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7. ABOUT METRO :-( THE ACQUIRED
COMPANY)
Industrial classification (services-computer
program)
Metro Information services, Inc. provides a
wide range of IT consulting and custom
software development services. Services
offered by metro include application system
development, IT engineering, systems
consulting, project outsourcing and general
support services. 7

8. KEANE ACQUISITION OF METRO INFORMATION
SERVICE
Keane acquired all the voting shares of metro in a
stock-for-stock transaction, accounted for using the
purchase method.
Total Purchase Price US$ 162Million, Including
assumption of debt.
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9. 15,978,804 shares
Metro shareholders
7,669,826 shares BUYER
(0.48)
Stock-for-stock
TARGET Transaction
9

10. Metro Keane
shareholders shareholders
Ownership percentage after
Merger:
Keane stockholders 90.2%
Metro stockholders 9.8%
As a result of
stock transaction
10

11. The total cost of the merger was $162,449 determined
as follows ( in thousands):-
 Fair value of Keane shares issued to Metro shareholders
In exchange for their surrendered stock…………………$ 141,58
Fair value of options exchanged……………………………
$6,754 of financial advisory,Legal & accounting fees…..
Cost
$8,500
Transaction bounses paid to some of metro officers ….
$5,610
TOTAL………………………………………………………
$162,449 11

12. Allocation of Cost of the acquired Company
 Under the Purchase method of accounting for
business combinations, the cost of the acquired
company must be allocated to the assets
acquired and liabilities assumed based on their
estimated fair market values on the date of
combination.
 Any excess of the total costs over the Net assets
of the acquired company is assigned to
Intangible assets if any and to goodwill.
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13. Based upon the valuation of tangible and intangible
assets acquired and liabilities assumed, keane has
allocated the total cost of the merger to the net
assets of Metro as follows:-(in thousands)
Net tangible assets…………………………………
$(37,984)
Net Intangible assets………………………………
$46,100
Goodwill…………………………………………… ....
$154,333
TOTAL
$162,449
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14. The following table presents the amounts assigned by keane Inc. to
each of the major assets and Liabilities acquired of Metro at
acquisition date:-( in thousands)
Cash $622
Accounts receivable $40,810
Other current assets $1,004
Property, plant & equipment,net $2,790
TOTAL ASSETS
$45,226 (A)
Accounts payable $3,583
Accrued compensation $9,800
Other liabilities $3,889
Note payable
$65,938
Total Current liabilities $83,210
(B)
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15. Accounting after acquisition
Under the purchase Method of accounting for a
business combination, the acquiring company
adds to its balance sheet the assets acquired
and the liabilities assumed, and reduces its cash
account or increases its equity account to reflect
the surrendered resources.
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16. KEANE INC. BALANCE SHEET
(in thousands)
Before merger Acquired assets After merger
& liabilities
Net current assets 313,614 + 42,436 = 356,050
Fixed tangible assets 43,053 + 2,790 = 45,843
Intangible assets 43,819 + 46,100 = 89,919
Goodwill 71,984 + 154,333 = 226,317
Total assets 472,470 718,129
Liabilities 75,858 + 83,210 = 159,068
Capital stock 118,321 + 148,339 = 266,660
Deferred merger cost + 14,110 = 14 ,110
Retained earnings 278,291 278,291
Total 472470 16 718,129

17. THE END
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