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MER GER
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A merger is a transaction that results in the
transfer of ownership and control of a
corporation.
When one company purchases another
company of an approximately similar size. The
two companies come together to become one.
Two companies usually agree to merge
when they can do something together that they
cant do on their own.
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Combining of two business entites
under common ownership.
Two firms coalesce and share
resources in order to realize a
common goal.
One firm buys the assests or
shares of another firm.
Take over implies the acquiringfirm is larger than the target.
Reverse take over takes place if
the target firm is bigger than the
acquirer.
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Parent stocks are usually retired
and new stock issued.
Name may be one of the parents
or a combination.
One of the parents usually
emerges as the dominant
management.
Can be controlling share, a majority,
or all of the target firms stock.
Can be friendly or hostile.
Usually done through a tender offer.
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Takeovers
A corporate action where an acquiringcompany makes a bid for an acquiree.If the target company is publicly
traded, the acquiring company willmake an offer for the outstandingshares.
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Target company's management and
board of directors agree to a merger
or acquisition by another company.
A takeover attempt that is
strongly resisted by the targetfirm
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In the case of a hostile takeover, the firm making the bid can bereferred to as a 'black knight'.
White knight' is a firm that may enter the fray as a 'friendly'
bidder.
A 'grey knight' is a third firm that is not welcomed by the'victim', seeking to exploit the situation to their own advantage.
Yellow knight' is a firm who originally seeks to launch a
hostile takeover bid but then moderates its stance and negotiates
on the basis of a merger. White squires is a firm which may not be big enough to
be able to take control of another firm but may well seek tobuy into the 'victim' firm to prevent the 'black knight' from
being able to achieve its takeover plans.
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HORIZONTAL MERGER
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.
Product X
Product Y
CompanyA
CompanyB
Product XY
CompanyAB
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VERTICAL MERGERS
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.
Product ofCompany A
Product ofCompany B
Product ofCompany AB
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CONGLOMERATE MERGER
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 extension.
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WAYS OF MERGER
A merger can take place in following four ways:
By purchase of assets.
By purchase of commonshare
The asset of company Y may be sold tocompany X. Once this is done company
Y is then legally terminated andcompany X survives.
The company share ofcompany Y may bepurchased by company X.When company X holds allthe shares of company Y it isdissolved.
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WAYS OF MERGER
By exchange of share forassets.
Exchange of shares forshares
Company X may give its share tostake holders of company Y for itsnet assets. Then company y isterminated by its shareholders
who now holds shares of companyX.
Company X gives its shares tothe share holders of companyY and then company Y isterminated.
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VISION OF MERGER
MutualBenefit
Maximize Profit
Expansion
ofbusiness
Economy of
Sales
Increasemarketshare
CostMaximizatio
n
Allocation ofassets &liabilities
Diversification
Goodwill
Product
Improvement
Futuregoal
Liquidity
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T 10 M & A i iti i
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Top 10 Mergers & Acquisitions in
India
Acquirer
Target
Company
Country
targeted
Deal value ($
ml) Industry
Tata Steel Corus Group plc UK 12,000 Steel
Hindalco Novelis Canada 5,982 Steel
Videocon
Daewoo
ElectronicsCorp.
Korea 729 Electronics
Dr. Reddys
LabsBetapharm Germany 597 Pharmaceutical
Suzlon Energy Hansen Group Belgium 565 Energy
HPCLKenyaPetroleumRefinery Ltd.
Kenya 500 Oil and Gas
Ranbaxy Labs Terapia SA Romania 324 Pharmaceutical
Tata Steel Natsteel Singapore 293 Steel
Videocon Thomson SA France 290 Electronics
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18 Oct2005
Tata Steel closes in onCorus
17 Oct2006
Corus confirms offerfrom Tatas for equity
acquisition
19 Oct2006
Corus boardrecommends Tatas'
takeover offer
20 Oct2006
Tata Steel clinchesCorus takeover deal
17 Nov2006
CSN of Brazil makesoverture to Corus
18 Nov2006
Tatas hold parleyswith Corus after CSN
bid
28 Nov2006
CSN begins talks withCorus pension
trustees
11 Dec2006
Corus bid: CSNoutbids Tatas' offer
12 Dec2006
Tata Steel, Corus getUS anti-trust nod for
takeover deal
15 Dec2006
CSN drops bid for USfirm; sends papers toCorus shareholders
20 Dec2006
Tata, CSN get Jan 30deadline for Corus
bids
22 Dec2006
EuropeanCommission approves
Tata's acquisition ofCorus
28 Dec2006
Bid for Corus may berevised, hints Ratan
Tata
11 Jan2007
EU seeks third-partycomments on CSN bid
for Corus
21 Jan2007
Tata, CSN in a fix overrevised Corus bid
23 Jan2007
Takeover panelmoving closer toauction; Tata may
raise bid
27 Jan2007
Tata, CSN battle forCorus to be settled by
auction
29 Jan2007
CSN wins EU OK totake over Britain's
Corus
30 Jan2007
Tatas enter auctionring to battle CSN for
Corus
31 Jan2007
Tata Steel wins Coruswith USD 11.3 bn
offer
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