Full description about the combining of two or more companies.

1. Submitted To :- Dr. Jasleen Kaur
Submitted By :- Pankaj
Modi
Class :- MBA 1ST
Roll No. :- 5521

2. Agenda
 Introduction (Definition & Overview)
 Types
 Methods of payment
 Case Study on Merger and Acquisitions
1. Facebook purchase Whatsapp
2. Microsoft Acquire Nokia
3. Adidas and Reebok Merger Case
4. Disney-Pixar Merger case
5. Flipkart Myntra Merge Deal
6. Android Acquired by Google
 Summary and Conclusions

3. Brief Introduction
 Mergers and acquisitions are both
aspects of strategic management ,
corporate finance and management
dealing with the buying, selling,
dividing and combining of different
companies and similar entities that
can help an enterprise grow rapidly in
its sector or location of origin, or a new
field or new location, without creating
a subsidiary, other child entity or using
a joint venture .

4. Merger (Definition)
 Combining of two business entities
under common ownership or
 Two firms combine and share
resources in order to realise a
common goal.

5. Acquisition (Takeover)
 An acquisition or takeover is the purchase of
one business or company by another company
or other business entity. Such purchase may
be of 100%, or nearly 100%, of the assets or
ownership equity of the acquired entity.
"Acquisition" usually refers to a purchase of a
smaller firm by a larger one. Sometimes,
however, a smaller firm will acquire
management control of a larger and/or longer-
established company and retain the name of
the latter for the post-acquisition combined
entity. This is known as a reverse takeover.

6. Types of Merger and
Acquisition
 Horizontal Merger:-This kind of merger exists
between two companies who compete in the
same industry segment. The two companies
combine their operations and gains strength in
terms of improved performance, increased
capital, and enhanced profits.
 Vertical Merger:-Vertical merger is a kind in
which two or more companies in the same
industry but in different fields combine together in
business.
 Conglomerate Merger:-Conglomerate merger is
a kind of venture in which two or more
companies belonging to different industrial
sectors combine their operations. All the merged

7.  Strategic mergers:-A Strategic merger usually
refers to long term strategic holding of target
(Acquired) firm. This type of M&A process aims
at creating synergies in the long run by increased
market share, broad customer base, and
corporate strength of business. A strategic
acquirer may also be willing to pay a premium
offer to target firm in the outlook of the synergy
value created after M&A process.
 Acqui-hire:-The term "acqui-hire" is used to refer
to acquisitions where the acquiring company
seeks to obtain the target company's talent,
rather than their products (which are often
discontinued as part of the acquisition so the
team can focus on projects for their new
employer). In recent years, these types of
acquisitions have become common in the
technology industry, where major web companies

8. Financing (Methods of
payment)
 Mergers are
generally
differentiated from
acquisitions partly
by the way in which
they are financed
and partly by the
relative size of the
companies. Two
main methods of
financing an M&A
deal exist:

9.  Cash
Payment by cash. Such transactions
are usually termed acquisitions
rather than mergers because the
shareholders of the target company
are removed from the picture and
the target comes under the
(indirect) control of the bidder's
shareholders.
 Stock
Payment in the form of the acquiring
company's stock, issued to the
shareholders of the acquired
company at a given ratio
proportional to the valuation of the
latter. They receive stock in the
company that is purchasing the
smaller subsidiary.

10. Case Study on Merger and
Acquisitions:-
1. Facebook has bought popular messaging
app WhatsApp for $19billion:-Facebook
has bought popular messaging app
WhatsApp for $19billion, what is the key
reason behind this biggest acquisition,
why did Facebook buy messaging app
WhatsApp?

11.  Facebook’s official added news about this
acquisition, that’s the shared mission of
Facebook and WhatsApp’s bring more
connectivity and utility to the world wide users
by delivering efficient and affordable internet
services, which will escalates growth of both
companies. For this Facebook paid $16billion
for WhatsApp, which consists of $4billion in
cash and $12billion in shares. There’s also a
further $3billion will be granted to WhatsApp’s
founders and employees. So far What’sApp
gained 450 million users across the world with
70 percent of them active on any one day and

12. Biggest Social Networking
Company Purchase WhatsApp
Facebook Inc.’s purchase
of mobile messaging
service Whatsapp Inc. for
$19 billion in stock and
cash is by far the
company’s largest
acquisition and bigger than
any which Microsoft,
Google or Apple had ever
done.
“According to CEO,
Mark Zucherberg,
WhatsApp seems to be

13. 2.Microsoft’s acquisition of
Nokia
Nokia hasn't always been a phone manufacturer.
The company dabbled in paper products, footwear
and tires before it became involved in the wireless
industry. Starting today, it begins a new chapter as
its Devices and Services division gets swallowed up
by Microsoft in a $7 billion deal.
Neither party was legally allowed to discuss
details about the acquisition in public.
This is just the beginning of a lengthy move-in
process in which the two companies can finally
start working together as one.

14.  Microsoft will take over Nokia's Devices
and Services business, which includes
both Smart Devices and Mobile Devices.
In other words: The Lumia, Asha and X
series are now all under Microsoft's
umbrella. Design teams, supply chain,
accessories, employees, developer
relations and most of Nokia's
manufacturing plants and testing facilities
are also on Microsoft's side, as are most
of the company's services like Mix Radio,
Store and more. Here, Nokia's mapping
entity, is considered a separate business
and isn't included as part of the deal, but
Microsoft has agreed to a 10-year
licensing agreement.

15. 3. Adidas and Reebok Merger
Case
 The second largest and the third largest
sports good companies finally decided to
come together as one to try and become the
leader in the market, i.e. Nike.
 However the two companies put together still
fall behind Nike. The three companies have
long been involved in a battle which is won
mostly by Nike as their expansive business
plans have helped them take over world
markets consistently as the number one
manufacturer of sports goods. The merger
benefited both the companies and brought
two of the most well known names in sports
goods together.

16. 4. Disney-Pixar Merger case
 Mickey and Nemo.
Pinocchio and “Toy Story.”
Cinderella and “Cars.” The
merger of legendary Walt
Disney and everything-we-
create-kids-adore Pixar was
a match made in cartoon
heaven. Disney had
released all of Pixar’s
movies before, but with
their contract about to run
out after the release of
“Cars,” the merger made
perfect sense. With the
merger, the two companies

17. Did the merger work?
 The Disney-Pixar merger was one of the
most anticipated mergers in recent
times. The merger of the two sets of the
most loved animated characters in the
world happened in 2006 when Disney
put up a bid to buy out Pixar. The two
companies have worked together often
and this was not so much of an
unanticipated move. The two companies
have merged well to bring out more
success to their already populated list of

18. Well, take a look at the
successful movies that Disney
and Pixar have put out since:
“WALL-E,” “Up,” and “Bolt.”

19. 5.Flipkart, Myntra merge deal in
Rs 2,000 crore
Two of India's biggest e-commerce companies, Flipkart and
Myntra, have merged to create an entity with annualized sales
of $1.5 billion, bringing them closer and in some cases rivaling
the much older offline retailers of those like Future Group,
Aditya Birla, and Reliance.
Their combined might also places them in a better position to
take on the likes of Amazon, which has become increasingly
aggressive in India's booming e-tailing market.
The deal was influenced by two large common shareholders,
Tiger Global and Accel Partners.

20. News About Merger

21. Brief Details
 Flipkart and Myntra did not disclose the details of
the deal, but analysts estimate that Myntra has
been valued at about Rs 2,000 crore ($350
million). The impending deal was first reported by
TOI in January 2014. This is the biggest M&A
deal in India's e- commerce story to date,
surpassing the $100 million that the Ibibo Group
spent to buy RedBus, again a story which first
broke on this newspaper in June last year.
 "We want to be a leader in every category that
we are present in. Fashion is definitely the
category of the future and we want to be the
biggest players in this space," said Sachin
Bansal, who co- founded Flipkart with Binny

22. 6. Android Acquired by Google
 Google acquired Android
Inc. in August, 2005,
making Android Inc. a
wholly owned part of
Google Inc.
 Nick Sears was the only
original founder that did
not stay with Android Inc.
after the acquisition.
 At this point in time, many
assumed that Google was
planning to enter the
mobile phone market with

23.  Once at Google, Rubin led a
team to develop a mobile
device platform powered by
the Linux kernel.
 Google marketed the
platform to handset makers
and carriers with the intent of
providing a flexible,
upgradable system.
 This caused speculation
about Google 's intention to
enter the mobile
communications market to
build.

24. Officially Announced
 On October 21st, 2008, Android
1.0 became available to the
public.
 "Today's announcement is more
ambitious than any single '
Google Phone' that the press
has been speculating about over
the past few weeks. Our vision is
that the powerful platform we're
unveiling will power thousands of
different phone models.“
-Eric Schmidt, former Google
Chairman/CEO

25. Summary and Conclusions
 The three legal forms of acquisition are
◦ Merger and consolidation
◦ Acquisition of stock
◦ Acquisition of assets
 M&A requires an understanding of complicated tax
and accounting rules.
 The synergy from a merger is the value of the
combined firm less the value of the two firms as
separate entities.
 The possible synergies of an acquisition come from
the following:
◦ Revenue enhancement
◦ Cost reduction
◦ Lower taxes
◦ Lower cost of capital