Mergers & Acquisitions

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MERGERS & ACQUISITIONS Kiran Ramesh

contents:

contents Merger Acquisition Amalgamation Merger & acquisition Competitive advantage Types of M&A Conclusion

merger:

merger 'Merger' Basically, when two companies become one. This decision is usually mutual between both firms.

Merger examples:

Merger examples Some recent examples of well-known mergers are as follows: British Salt operating in UK merged with TATA Chemicals based in India. Zain Telecommunications operating in Africa merged with Bharti Airtel Limited based in India. Bank of Rajasthan operating in India merged with ICICI Bank (India).

acquisition  :

acquisition Definition:- Acquiring control of a corporation , called a target , by stock purchase or exchange , either hostile or friendly. also called takeover.

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1. Taking custody of records . 2. Taking possession of an asset by purchase . 3. Taking control of a firm by purchasing 51 percent (or more) of its voting shares .

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Amalgamation: Amalgamation is the merger of one or more companies with another company or the merger of two or more companies to form one company. Two methods of amalgamation: (a) amalgamation in the nature of merger (b) amalgamation in the nature of purchase. Nature of merger is an amalgamation which satisfies all the following conditions. ( i ) All the assets and liabilities of the transferor company become - transferee company.

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(ii) Shareholders holding not less than 90% of the face value of the equity shares - transferee company (iii) Consideration for the amalgamation - Issue of equity shares in the transferee company, except that cash may be paid in respect of any fractional shares. (iv) The business of the transferor company is intended to be carried on, after the amalgamation, by the transferee company. (v) No adjustment is intended to be made to the book values of the assets and liabilities of the transferor company when they are incorporated in the financial statements of the transferee company except to ensure uniformity of accounting policies. Nature of purchase is an amalgamation which does not satisfy any one or more .

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Mergers & Acquisitions Mergers Acquisitions •two firms are combined on a relatively co-equal basis • one firm buys another firm

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• New stock issued • Name may be one of the parents’ or a combination • Controlling share stake • Can be friendly or hostile Mergers Acquisitions Mergers & Acquisitions Defined • Done through tender offer • Dominant management by one company

Examples....:

Examples.... The biggest M & A deal was done by Reliance Communication which merged its telecoms tower business with GTL infrastructure Ltd for USD 11 billion. Bharti Airtel acquired Kuwait based Zain Telecom's African business for USD 10.7 billion. Reliance Industries acquired Infotel broadband for USD 1 Billion.

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Competitive Advantage Doing the Deal Target Firm’s Perspective Seek Information from Bidders Invite Other Bidders to Join in Bidding Contest Delay, But Do Not Stop the Acquisition

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Types of M&A Horizontal : Companies producing s imilar products in the industry Vertical : Companies producing different goods/components for the same product. Conglomerate : companies are operating in different industries Product Extension Mergers: A product extension merger takes place between two business organizations that deal in products that are related to each other and operate in the same market

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Summary M&A activity is a mode of entry for integration and diversification strategies A firm’s M&A strategy should satisfy the logic of corporate level strategy

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Thank You One and All

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