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Take over implies the acquiring firm is larger than the target .reverse take over takes place if the target firm is larger than the acquirer Slide 4: • parent stocks are usually retired and new stock issued • name may be one of the parents’ or a combination • can be a controlling share, a majority, or all of the target firm’s stock • can be friendly or hostile Mergers & Acquisitions • usually done through a tender offer • one of the parents usually emerges as the dominant management Types of Mergers : Types of Mergers Economists distinguish between types of mergers: Horizontal Vertical Conglomerate Horizontal merger : Horizontal merger Definition:- A merger occurring between companies producing similar goods or offering similar services. This type of merger occurs frequently as a result of larger companies attempting to create more efficient economies of scale. Example:- The amalgamation of Daimler-Benz and Chrysler Company A Company B Company A B Vertical Mergers : Vertical Mergers Definition:- A merger between two companies producing different goods or services for one specific finished product. The merger of firms that have actual or potential buyer-seller relationships. Example:- An example of a vertical merger is a car manufacturer purchasing a tire company. Product of company A Product of Company B Product of company A B Conglomerate Merger : Conglomerate Merger Definition:- A merger between firms that are involved in totally unrelated business activities. There are two types of conglomerate mergers:- Pure:- Pure conglomerate mergers involve firms with nothing in common Mixed:- mixed conglomerate mergers involve firms that are looking for product extensions or market extensions. Example:-A simple example would be, American Broadcasting company (ABC) which has highest broadcasting channels joining Waltdisney that creates cartoon characters to promote cartoon channels in America. Ways of Merger : Ways of Merger A merger can take place in following four ways: By purchase of assets. By purchase of common share. The asset of company Y may be sold to company X . Once this is done company Y is then legally terminated and company X survives . The common share of company Y may be purchased by company X. when company X holds all the shares of company Y it is dissolved . Ways of Merger : Ways of Merger By exchange of share for assets. Exchange of shares for shares. Company X may give its share to stake holders of company Y for its net assets. Then company Y is terminated by its shareholders who now holds shares of company X. Company X gives its shares to the share holders of company Y and then company Y is terminated Vision of a successful merger : . Vision of a successful merger Mutual benefit Maximize profit Expansion of a business Economy of sales Increase market share Cost maximization Allocation of assets & liabilities Diversification of risk Goodwill Product improvement Future goal liquidity : ENGINEERED TO BE GREAT CARS . : . MERCEDES DIAMLER BENZ DAIMLERCHRYSLER History Of Daimler AG : History Of Daimler AG Daimler AG is a German manufacturer of automobiles, motor vehicles, and engines, which dates back more than a century. An Agreement of Mutual Interest was signed on May 1, 1924 between Benz & Cie (founded 1883) of Karl Benz and Daimler Motoren Gesellschaft (founded 1890) of Gottlieb Daimler and Wilhelm Maybach. Both companies continued to manufacture their separate automobile and internal combustion engine brands until, on June 28, 1926, when Benz & Cie. and Daimler Motoren Gesellschaft AG formally merged—becoming Daimler-Benz AG—and agreed that thereafter, all of the factories would use the brand name of Mercedes-Benz on their automobiles. In 1998 Daimler-Benz AG "merged" with the American automobile manufacturer Chrysler Corporation, and formed DaimlerChrysler AG. In 2007, when the Chrysler group was sold off to Cerberus Capital Management, the name of the parent company was changed to simply Daimler AG. 1926 1998 1924 1883 2007 Timeline of Daimler AG Benz & Company, 1883–1926 Daimler Motoren Gesellschaft AG, 1890–1926 Daimler-Benz AG, 1926–1998 DaimlerChrysler AG, 1998–2007 Daimler AG, 2007–present History of Chrysler : History of Chrysler The company was founded by Walter Chrysler (1875 - 1940) on June 6, 1925, when the Maxwell Motor Company (est. 1904) was re-organized into the Chrysler Corporation. Introduction of the first Chrysler vehicle. Opening of the Chrysler Building in New York, the tallest building at that time. Chrysler vehicles increase in popularity and market share ranks second in the US. Chrysler purchases the majority stake of Simca, France in order to penetrate the European market. Simca is sold to Peugeot. Chrysler and its subsidiaries were part of the German based DaimlerChrysler AG (now Daimler AG) 1925 1926 1930 1950 1963 1978 1998 Slide 16: Schrempp and Eaton met to discuss the possible merger January 12, 1998 Chronology of events in the DaimlerChrysler AG merger May 6, 1998 Merger agreement was signed in London May 7, 1998 Merger agreement made public. Surprised the business community, including the employees of Daimler Benz and Chrysler. Only 20 -30 managers were in the “loop” May 14, 1998 Daimler-Benz Supervisory Board OKs the merger July 23, 1998 European Commission approved the merger July 31, 1998 Federal Trade Commission approved the merger August 6, 1998 DaimlerChrysler announced that their shares would trade as “global stock” instead of ADRs September 18, 1998 97% of Chrysler shareholders and 80% of Daimler-Benz shareholders approved the merger November 12, 1998 Merger completed Slide 17: Business Areas of DaimlerChrysler AG DaimlerChrysler AG Mercedes Car Group Chrysler Group Truck Group Van Bus Other Financial service Mercedes- Benz May - Bach Smart Dodge Jeep Chrysler Mopar Fight liner Fuso Sterling trucks Western star buses Thomas Busses You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.