mergers and takeovers

1. SUBMITTED BY:
SUBMITTED TO:
Aakansha Agarwal(7132)
Dr. Ranjan Upadhyay
Arti Surtaniya(7155)
FMS (WISDOM)
Jyoti Yadav(7193)
MBA 3rd sem

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3.  INTRODUCTION OF MERGER
 TYPES OF MERGER
 STRATEGIC PLANNING
 ACQUISITIONS & TAKEOVERS
 MERGER & ACQUISITION DEALS
 CONTRIBUTION OF MERGER &
TAKEOVER
 FIVE STAGES OF MERGER
 MERGERS IN INDIA
 ADVANTAGES
 DISADVANTAGES
 CONCLUSION
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4.  whereby at least two companies combine to
form one single company .
 one corporation survives and the merged
corporations go out of business.
 A subsidiary merger is a merger of two
companies where the target company becomes
a subsidiary or part of a subsidiary of the
parent company.
X + Y = Z
Example
X + Y = X
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5.  Horizontal Mergers
- between competing companies
 Vertical Mergers
- Between buyer-seller relation-ship
companies
 Conglomerate Mergers
- Neither competitors nor buyer-seller
relationship
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6.  It is a management tool period.
 To help any organization do a better job.
 To ensure that members of the organization
are working toward the same goals.
 To assess and adjust the organization's
direction in response to a changing
environment.
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7.  An act of acquiring effective control by one
company over assets or management of another
company.
 Two or more companies may remain independent.
 Separate legal entities.
 When an acquisition is 'forced' or 'unwilling', it is
called a takeover.
 When managements of acquiring and target
companies mutually agree for the takeover, it is
called acquisition or friendly takeover.
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8. Tata Steel buys Corus Plc USD 12.1 billion
Hindalco acquired Novelis Inc. USD 6 billion
Videocon Industries acquired
Daewoo Electronics Corporation USD 730 million
Limited
Vodafone buys Hutch USD 11 billion
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9.  Merger and Acquisitions have evolved in
five stages .
 They are triggered by economic factors.
 The macroeconomic environment, which
includes the growth in GDP, interest rates
and monetary policies play a key role in
designing the process of mergers or
acquisitions.
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10. First Wave Mergers.
Second Wave Mergers.
Third Wave Mergers.
Fourth Wave Mergers.
Fifth Wave Mergers.
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11.  The first wave mergers commenced from 1897 to
1904.
 During this phase merged companies enjoyed
monopoly over their lines of production.
 The first wave mergers were mostly horizontal
mergers.
 End Of 1st Wave Merger
 The 1st phase ended in failure since they could not
achieve the desired efficiency.
 The failure was fuelled by the slowdown of the
economy.
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12.  The second wave mergers took place from
1916 to 1929.
 It focused on the mergers between
oligopolies, rather than monopolies .
 Technological developments provided the
necessary infrastructure.
 They were mainly horizontal or conglomerate
in nature.
 End Of 2nd Wave Mergers
 They ended with the stock market crash in
1929 and the great depression.
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13.  The mergers that took place during this
period (1965-69) were mainly conglomerate
mergers.
 Mergers were inspired by high stock prices &
interest rates.
 End Of The 3rd Wave Merger
 The 3rd wave merger ended with the plan to
split conglomerates in 1968.
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14.  The 4th wave merger started from 1981 and
ended by 1989.
 Mergers took place between the oil and gas
industries, pharmaceutical industries,
banking and airline industries.
 They ended with anti takeover laws,
Financial Institutions Reform and the Gulf
War.
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15.  The 5th Wave Merger (1992-2000) was
inspired by globalization, stock market boom
and deregulation.
 It took place mainly in the banking and
telecommunications industries.
 The 5th Wave Merger ended with the burst
in the stock market bubble.
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16.  From 1991 to date, mergers are not regulated
from a competition perspective.
 The Asian Development Outlook 2005
mentions the impact of M&As in India.
 It indicates for example – Coca Cola re-
entered the Indian market in 1993 by
acquiring Parle.
 Pepsi gained a major market presence by
acquiring Duke in 1988.
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17. HLL has succeeded in enhancing its market
share through a process of Mergers
/Acquisitions
Product 1992-93 1997-98
Ice Cream 0.00 74.06
Sauces,ketchups,jams 0.00 63.54
Dental hygiene product 11.20 41.56
Soaps 19.66 26.01
Synthetic detergents 33.12 46.72
Vanaspati 0.85 13.90
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18. • Revival in deal activity in the country.
• More than double the transactions in first five
months as compared to same period last year.
Jan – May ‘10 Jan – May ‘09
No of deals 439 179
Value of deals USD 30 bn USD 8 bn
• Rebound linked to recovery of Indian and global
economy.
• Active sectors – Telecom, Pharma, Cement, FMCG.
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19. •Expansion and growth
•Tax Benefits
•Financial Synergy
•Creating value to stakeholders
•Risk reduction
•Balancing product cycle
•Gain in market share
•Increasing EPS
•Gaining cost efficiency
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20. • Costs of mergers and takeovers
• Legal expenses
• Short-term opportunity cost
• Intangible costs
• Potentially lowered industry innovation
• Decline in equity pricing and investment
value
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21.  Two companies are more valuable,
profitable than individual companies.
 The shareholder value is also over and above
that of the sum of the two companies.
 M&A’s continue to be an important tool
behind growth of a company.
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22. The list of past and anticipated mergers covers every
size and variety of business.
The basic reason is:
To achieve economies of scale,
Widen their reach,
Acquire strategic skills, and
Gain competitive advantage.
Therefore, it is right time for business houses and
corporate to watch the Indian market, and grab the
opportunity.
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