1. International Business
Assignment
on
Mergers &Acquisition
Submitted to:-
Submitted by:-
Mahek Goreja Vipul Pirodia

2. Mergers
• Merger is defined as combination of two or more
companies into a single company where one survives
and the others lose their corporate existence.
• Merger is also defined as amalgamation i.e. it is the
fusion of two or more existing companies.
• The amalgamating companies loose their identity and
the shareholders of the amalgamating companies
become shareholders of the amalgamated company.

3. Acquisitions
• Acquisition in general sense is
acquiring the ownership in the property.
In the context of business
combinations, an acquisition is the
purchase by one company of a
controlling interest in the share capital
of another existing company.

5. Ways to takeover
Friendly Takeover:-
The acquiring firm makes a financial proposal to the target firm’s
management and board. This proposal might involve the merger of the two
firms, the consolidation of two firms, or the creation of parent/subsidiary
relationship.
Hostile Takeover:-
A hostile takeover may not follow a preliminary attempt at a friendly
takeover. For example, it is not uncommon for an acquiring firm to embrace
the target firm’s management in what is colloquially called a bear hug

6. Leveraged Buyouts.
These are a form of takeovers where the acquisition is funded
by borrowed money. Often
the assets of the target company are used as collateral for the
loan. This is a common structure when acquirers
wish to make large acquisitions without having to commit too
much capital, and hope to make the acquired
business service the debt so raised.
Bailout Takeovers.
Another form of takeover is a ‘bail out takeover’ in which a
profit making company acquires
a sick company. This kind of takeover is usually pursuant to a
scheme of reconstruction/rehabilitation with the
approval of lender banks/financial institutions. One of the
primary motives for a profit making company to
acquire a sick/loss making company would be to set off of the
losses of the sick company against the profits of
the acquirer, thereby reducing the tax payable by the
acquirer. This would be true in the case of a merger
between such companies as well.

7. Types of mergers…
Conglomerate Co-Generic
Merger Merger
Horizontal Merger
Vertical Merger Cash Merger.

8. Its USP…
Gaining Cost Efficiency
When two companies come together by merger or
acquisition, the joint company benefits in terms
ofcost efficiency. A merger or acquisition is able to
create economies of scale which in turn generates
cost efficiency.
When a firm wants to enter a new market
When a firm wants to introduce new products
through research and development

9. Cont..
When a forms wants achieve administrative
benefits
To increased market share
To lower cost of operation and/or production
To gain higher competitiveness
For Financial leveraging
To improve profitability and EPS

10. Its faliures…
• There are several reasons merger or an acquisition failures.
Some of the prominent causes are summarized below:If a
merger or acquisition is planned depending on the (bullish)
conditions prevailing in the stock market, it may be risky.
• There are times when a merger or an acquisition may be
effected for the purpose of "seeking glory," rather than
viewing it as a corporate strategy to fulfill the needs of the
company. Regardless of the organizational goal, these top
level executives are more interested in satisfying their
"executive ego.“
• Cont..

11. In addition to the above, failure may also
occur if a merger takes place as a defensive
measure to neutralize the adverse effects of
globalization and a dynamic corporate
environment.
Failures may result if the two unifying
companies embrace different "corporate
cultures.“
It cuts the job s of employee for example
when P&G merge with GILLETTE 6000 jobs
were cut .

12. Tata Steel’s mega takeover of European steel
major Corus for $12.2 billion. The biggest ever for
an Indian company. This is the first big thing
which marked the arrival of India Inc on the
global stage.

13. Vodafone’s purchase of 52% stake in Hutch Essar for
about $10 billion. Essar group still holds 32% in the Joint
venture.
Hindalco of Aditya Birla group’s acquisition
of Novellis for $6 billion.
Ranbaxy’s sale to Japan’s Daiichi for $4.5 billion. Sing brothers sold
the company to Daiichi and since then there is no real good news
coming out of Ranbaxy.
ONGC acquisition of Russia based Imperial Energy for
$2.8 billion. This marked the turn around of India’s
hunt for natural reserves to compete with China.

14. P&G to acquire Gillette for $57bn
Procter & Gamble is to buy Gillette for $57bn
(£30.2bn) and create the world's largest stable of
consumer brands.
Tata Motors acquisition of luxury car
maker Jaguar Land Rover for $2.3 billion. This
could probably the most ambitious deal after the
Ranbaxy one. It certainly landed Tata Motors into lot
of trouble.

15. Reliance Industries taking over Reliance
Petroleum Limited (RPL) for 8500 crores
or $1.6 billion.
HDFC Bank acquisition of Centurion
Bank of Punjab for $2.4 billion.