2.  Strategy management
 Level of strategy in an organization
 Why do firms merge or acquire other firms?
 Basic Definition
 Type of Merger
 Motive behind merger and Acquisition
 Benefit of Merger & Acquisition
 Some example

3.  A company’s strategy consists of the combination
of competitive moves and business approaches
that managers employ to please customers,
compete successfully, and achieve organizational
objectives.
 Strategic management is a continuous process.

5.  Strategy for change
 Strategy for stability
 Strategy for expansion
Merger &Acquisition is the part of strategy
for expansion

6.  Why do firms merge or acquire other firms?
Several possibilities.
› Increase market power
› Acquire financial strength,
› Tax loss carry forwards
› Acquire specific product lines
› Achieve synergies
› Gain economies of scale
 Strategies subject to debate: Prevalent belief is that
M&A result in increased profits, competitiveness, &
increased stockholder wealth.

7. A. Merger; combination of two firms into one.
B. Acquisition; one business buys another.
1. Cash.
2. Securities.
3. Combination of cash and securities.

8.  Horizontal Mergers
 Vertical Mergers
 Conglomerate Mergers
 Concentric Mergers

9.  Horizontal –Combination of two or more firm
operating in same stage of production.
 Ex: Merger of Tata Industrial finance Ltd with
Tata Finance Ltd
 Vertical-When two or more firm operating in
the different stage of production.
 Ex: Merger of Reliance Petro Chemicals Ltd
with Reliance Industries Ltd is a Back ward
Integration

10.  Conglomerate- These mergers involve firms
engaged in unrelated type of business
activities i.e. the business of two companies
are not related to each other horizontally ( in
the sense of producing the same or competing
products),nor vertically
 Example: General Electric buying NBC
television

11.  Concentric Mergers- Merger of two firms
that are so related that there is a carry over
of specific management functions
(research, manufacturing, finance,
marketing, etc.)
 Example: Citigroup (principally of a
bank)buying Salomon Smith Barney (an
investment banker/stock brokerage
operation)

12.  An acquisition, also known as a, takeover or a
buyout, is the buying of one company by another.
 An acquisition may be friendly or hostile.
 In the former case, the companies cooperate in
negotiations; in the latter case, the target is unwilling
to be bought or the target's board has
no prior knowledge of the offer.
 Acquisition usually knowledge of the offer.
Acquisition usually refers to a purchase of a smaller
firm by a larger one.

13.  Quicker way to growth.
 Accessing new markets.
 Taking on the global competition.
 Improving operating margins and efficiencies
 Acquiring visibility and international brands .
 Buying cutting-edge technology rather than
importing it.
 Developing new product mixes

14.  Limited Competition
 Gaining Market power
 Diversification
 Improving profitability
 Cost reduction
 Faster growth

15.  Tata steel buys Corus Plc : 12.1$ billion
 Hindalco acquired novelis: 6$ billion
 Tata buy jaguar and land rover : 2.3$ billion
 Essar steel buys Algoma Steel: 1.58$ billion
 Vodafone buys hutch : 11$ billion
 POSCO to invest in building steel manufacturing plants and
facilities in India by 2016
 Goldman Sachs Plans investment in private equity, real estate, and
private wealth management