Mergers and Acquisitions

 Mergers and acquisitions (M&A) are both aspects of strategic
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.
 The distinction between a "merger" and an "acquisition" has become
increasingly blurred in various respects (particularly in terms of the
ultimate economic outcome), although it has not completely disappeared
in all situations. From a legal point of view, a merger is a legal
consolidation of two companies into one entity, whereas
an acquisition occurs when one company takes over another and
completely establishes itself as the new owner (in which case the target
company still exists as an independent legal entity controlled by the
acquirer). Either structure can result in the economic and financial
consolidation of the two entities.
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 Merger: A transaction where two firms agree to integrate their
operations on a relatively co-equal basis because they have resources
and capabilities that together may create a stronger competitive
advantage.
Example: Company A + Company B= Company C.
 Acquisition: A transaction where one firms buys
another firm with the intent of more effectively
using a core competence by making the acquired
firm a subsidiary within its portfolio of business
Example:Company A + Company B= Company A.
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i. Merging of two organization
in to one.
ii. It is the mutual decision.
iii. Merger is expensive than
acquisition(higher legal
cost).
iv. Through merger
shareholders can increase
their net worth.
v. It is time consuming and the
company has to maintain
legal issues.
vi. Dilution of ownership occurs
in merger.
i. Buying one organization by
another.
ii. It can be friendly takeover or
hostile takeover.
iii. Acquisition is less expensive
than merger.
iv. Buyers cannot raise their
enough capital.
v. It is faster and easier
transaction.
vi. The acquirer does not
experience the dilution of
ownership.
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M&A
Market-extension
merger
Two companies
that sell the same
products in different
markets
Product-extension
merger
Two companies selling
different but related
products in the same
market
Conglomeration
Two companies
that have no
common business
areas
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 Adani Enterprises takes over Abbot Point Coal.
 The Vedanta – Cairn acquisition.
 Mahindra & Mahindra acquires Ssangyong Motors.
 Aditya Birla Group acquires Columbian Chemicals.
 Kotak Mahindra Bank acquired ING Vysya Bank.
 iGate completes acquisition of Patni Computers.
 Vodafone acquired Hutch.
 Hindalco acquired Novelis.
 HDFC Bank acquires Centurion Bank of Punjab.
 Tata Motors acquires Jaguar and Land Rover.
 Snapdeal acquires Freechage and GoJavas.
 DHL-Bluedart Merged.
 OLA Cabs acquires TaxiForSure.
 Tech Mahindra acquired Satyam.
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 Approval from Board of Directors,
 Information to the stock exchange,
 Application in the High Court,
 Shareholders and Creditors meetings,
 Sanction by the High Court,
 Filing of the court order,
 Transfer of assets or liabilities,
 Payment by cash and securities.
 Total period: 210+ days.
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 Understanding the markets.
 Accessing the markets.
 Overcome the entry barriers.
 Synchronization of customers.
 Increase market share.
 Risk minimization.
 Restructuring Plans.
 Economies of large scale.
 Reducing competition.
 Expansion and Growth.
 Surplus Resources.
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 Product , services and business diversification.
 Developing new product mixes.
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 Integration difficulties.
 Huge debt.
 Costs underestimated.
 Decrease in R&D activities.
 Change in management’s objectives.
 Over diversification.
 Inability to Achieve Synergy.
 Inadequate Evaluation of Target.
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Mergers and Acquisitions

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Mergers and Acquisitions