...overseas. The combined operations will need about USD$250 million - USD$300 million over the next two quarters and it may look at private placement of shares, UB group Chief Financial Officer Ravi Nedungadi said. India's top spirits maker UB group, which runs Kingfisher Airlines, bought a 26 percent stake in Deccan in May and subsequently raised it to 46 percent. Deccan will be called Kingfisher Airlines after the merger and the charter operations of Deccan will be spun off into a separate firm to be equally owned by Deccan's founder G.R Gopinath and the UB group, Deccan said. The combined entity will operate the two brands -- Deccan, a low-cost airline, and Kingfisher, a full service carrier, Nedungadi said. "The two board's have taken a decision. The legal process will take anywhere between 4-6 months. From an organizational point of view the the integration is already on the fast track," he said. The merger was recommended by consultancy firm Accenture and the merger methodology will be suggested by consultants KPMG and Dalal and Shah. "The merger will be structured in such a way to allow us to carry forward the accumulated losses," Nedungadi said. The two airlines have a combined loss of about INR20 billion rupees and this can be set off against future profits. Nedungadi said the maintenance and engineering divisions will remain with the combined airline for now. UB group will also look at rationalizing capital expenditure. The two airlines, which control...
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...Trident University Module 5- SLP FIN501 Dr. Glenn Tenney Jeremy Stack Net present Value, Mergers and acquisitions When brainstorming on the possible ideas of mergers or acquisitions it was easy at first to automatically think similar corporations within the same market either small or big or even in direct competition. Upon researching and reviewing the required readings I realized there are numerous types of mergers and acquisitions that could and should be considered in the terms of better business for my company (Target), for the market, and for the consumers in general. The Target Corporation is an American retailing company. It is the second largest discount retailer behind Walmart. With that being said it would at first be a natural thought maybe to think of a merger with Walmart, but as Target being second to them it wouldn’t necessarily be a merger as it would be an acquisition by Walmart and probably wouldn’t make the most business sense even if both were allowed to remain as separate entities. Beyond that certain regulatory bodies would probably find a merger or acquisition to constitute a monopoly and threaten competition within the respective industry. So what would be a company worth merging with or acquiring? One such company that comes to mind which I believe would be considered a Horizontal merger would be the Kmart Corporation as they are in direct competition. Kmart is listed as the 3rd largest discount retail chain behind Walmart and Target...
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...HINDALCO - NOVELIS ACQUISITION: CREATING AN ALUMINIUM GLOBAL GIANT AUTHORS INFORMATION: NAME : 1. AMAN SRIVASTAVA, Assistant Professor, Jaipuria Institute of Management, Noida, asrivastava@jimnoida.ac.in 2. RAKESH GUPTA, Associate Professor, IILM, Greater Noida, guptark123@rediffmail.com ABSTRACT HINDALCO - NOVELIS ACQUISITION: CREATING AN ALUMINIUM GLOBAL GIANT Last decade witnessed growing appetite for takeovers by Indian corporate across the globe as a part of their inorganic growth strategy. In this chain Indian aluminium giant Hindalco acquired Atlanta based company Novelis Inc, a world leader in aluminium rolling and flat-rolled aluminium products. Hindalco Industries Ltd., acquired Novelis Inc. to gain sheet mills that supply can makers and car companies. Strategically, the acquisition of Novelis takes Hindalco onto the global stage as the leader in downstream aluminium rolled products. The transaction makes Hindalco the world's largest aluminium rolling company and one of the biggest producers of primary aluminium in Asia, as well as being India's leading copper producer. The case study attempts to analyze the financial and strategic implications of this acquisition for the shareholders of HINDALCO. The case explains the acquisition deal in detail and highlights the benefits of the deal for both the companies. Followings are the main issues to be discussed for critical review of this case: What is the strategic rational for this acquisition...
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...Taylor Adams Dr. E. Montgomery BUS 508 Contemporary Business 02/14/2014 Mergers and Acquisitions When Proctor and Gamble acquired Gillette Products in 2005, Warren Buffet stated “This was a dream deal, this acquisition would create the greatest consumer products company in the world”. (Englishe, 2011) This is one reason why P&G chose to take on the major brand. Other than being known for their razors, Gillette’s products include Duracell batteries, Oral-B, and Braun. This acquisition meant Proctor and Gamble would take much control over the grocery market shelves. Control was everything to P&G at the time of this acquisition. P&G opened a huge door for Gillette, a door that looked inviting to shareholders. Gillette would now be invited into new markets such as China and Japan. China and Japan were two fast growing grocer markets. While this was a great end of the deal for Gillette, P&G would benefit greatly as well. Gillette housed products that were selling and evolving in the market faster than the brand itself. These were the type of acquisitions P&G needed to remain at the top of the product chain, and open the eyes of its competitors. (Englishe, 2011) Proctor and Gamble, the “signed partnership agreement” that formed in 1837 between William Proctor and James Gamble, was making money from the very beginning of its existence. Gamble, began in the large business venture as William Proctor’s protégé, in already existing soap and candle factory...
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...BOMBARDIER TRANSPORTATION AND THE ADTRANZ AQUISITION CASE ANALYSIS Prepared by: Samuel C. Anyanwu Date of Submission: February 17, 2015. Submitted to: Prof Dr. Kelly Thompson. Bombardier Inc. (BBD) had over the years built a well diversified and versatile business in order to reduce cyclical risk, ensure long term survival and redefine the company’s position on a global scale. The route taken to achieve this level of diversification was through strategic acquisition of key players in the industry that complimented BBD’s vast business ventures. BBD’s growth philosophy was to seek acquisitions that enabled the company to apply exiting competencies without focusing solely on financial gains but more on how acquired companies would complement and strengthen its existing businesses. BBD’s philosophy also centered around being patient to bring about seamless integration of acquired companies with the aim of eliminating waste and turning around underperforming assets through its application of effective and efficient management approaches. [ (BOMBARDIER & ADTRANZ AQUISITION CASE) ] BBDs kin approach to integration of acquired companies enabled greater combination potential as this approach brought about strong employee support because there was the belief that BBD would protect jobs and invest in new product lines. BBD’s approach to integration was seen in the acquiring of Adtranz despite the fact that the company agreed to a limited due diligence process for the deal...
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...MERGERS & ACQUISITIONS WITH RESPECT TO ORGANIZATIONAL CULTURE INTRODUCTION 1. Mergers and acquisitions have often come in waves of activity that were motivated by different factors. Further 1890 to 1905, more than 200 mergers of major importance occurred as many small companies in the same industries merged to form monopolistic entities. After 1905, merger activity was particularly heavy during the 1920s as small companies in similar industries continued to merge to gain market power. According sources, the capacity of merger activity was also heavy after World War II as large companies completed friendly acquisitions of small privately held companies. Another large wave of mergers occurred in the 1960s and 1970s, motivated largely by the quest for risk reduction through diversification. 2. Investopedia explains “Mergers and Acquisitions – M & A” as general term used to refer to the consolidation of companies. A merger is a combination of two companies to form a new company, while an acquisition is the purchase of one company by another in which no new company is formed (investopedia.com, 2013). 3. M & A and corporate restructuring are a vital part of the corporate financial world. According to Ben McClure everyday Wall Street investment bankers arrange M & A transactions, which bring separate companies together to transform into large ones. 4. Furthermore describing on Mergers and Acquisitions, two terms separately. Mergers: two similar-sized firms are combined –...
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...Sandeep K Krishnan In an ideal merger, the newly created entity pools the best features of the two merging organizations. A well planned process built on the foundations of an open, honest and consistent communication strategy can pave the way. Mergers and acquisitions have become a common phenomenon in recent times. A merger of the size like HP-Compaq has implications for the workforce of these companies across the globe. Although the merging entities give a great deal of importance to financial matters and the outcomes, HR issues are the most neglected ones. Ironically studies show that most of the mergers fail to bring out the desired outcomes due to people related issues. The uncertainty brought out by poorly managed HR issues in mergers and acquisitions have been the major reason for these failures. The human resource issues in the mergers and acquisitions (M&A) can be classified in two phases the pre-merger phase and the post merger phase. Literature provides ample evidence of difference in between the human resource activities in the two stages: the pre-acquisition and post acquisition period. Due diligence is important in the first phase while integration issues take the front seat in the later. The pre acquisition period involves an assessment of the cultural and organizational differences, which will include the organizational cultures, role of leaders in the organization, life cycle of the organization, and the management styles. The mergers often prove to be traumatic...
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...Sandeep K Krishnan In an ideal merger, the newly created entity pools the best features of the two merging organizations. A well planned process built on the foundations of an open, honest and consistent communication strategy can pave the way. Mergers and acquisitions have become a common phenomenon in recent times. A merger of the size like HP-Compaq has implications for the workforce of these companies across the globe. Although the merging entities give a great deal of importance to financial matters and the outcomes, HR issues are the most neglected ones. Ironically studies show that most of the mergers fail to bring out the desired outcomes due to people related issues. The uncertainty brought out by poorly managed HR issues in mergers and acquisitions have been the major reason for these failures. The human resource issues in the mergers and acquisitions (M&A) can be classified in two phases the pre-merger phase and the post merger phase. Literature provides ample evidence of difference in between the human resource activities in the two stages: the pre-acquisition and post acquisition period. Due diligence is important in the first phase while integration issues take the front seat in the later. The pre acquisition period involves an assessment of the cultural and organizational differences, which will include the organizational cultures, role of leaders in the organization, life cycle of the organization, and the management styles. The mergers often prove to be traumatic...
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...British Journal of Management, Vol. 9, 91-114 (1998) Attributes of Successful and Unsuccessful Acquisitions of US Firms^ Michael Hitt,* Jeffrey Harrison,^ R. Duane Ireland* arid Aleta Best§ *Lowry Mays College of Business Administration, Texas A&M University, College Station, TX 77843-4221, •College of Business Administration, University of Central Florida, Orlando, FL 32816, 'Hankamer School of Business, Baylor University, Waco, TX 76798-8004, and ^College of Business and Industry, University of Massachusetts Dartmouth, North Dartmouth, MA 02747, USA Acquisitive growth strategies continue to be popular, in spite of increasing evidence that they often do not enhance the financial performance of acquiring firms and may adversely affect innovation. However, some acquisitions are associated with both increases in financial performance and a strengthened commitment to R&D while others experience decreases in both. Multiple theories have been offered to explain acquisitions and their outcomes, but few have received strong empirical support. This paper describes a multiple rater, multiple-case study of acquisitions that had highly favourable outcomes and others that experienced highly unfavourable outcomes. All twelve of the high performing acquisitions studied were found to exhibit the dual characteristics offiriendlinessduring acquisition negotiations and resource complementarities between the two firms. Additionally, debt played an important role in the success (low...
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...development (R&D) operations to improve expansion. Second, another UK pharmaceutical company AstraZeneca carried out takeovers of bio-science firms (mergers and acquisitions M&A). Compare and contrast these two approaches to growth by discussing their relative advantages and disadvantages. Use examples from any relevant sector, not just "Big Pharma". Summary The paper presents a contrast between conservative and aggressive growth options. It discusses mergers and acquisitions, organic growth and alliances using examples from a range of industries which include online businesses, brewery firms, soft drink giants and also a major pharmaceutical industry merger. In examining the interface between the different growth options the paper posits that they are not mutually exclusive and one may lead to the other, whereas a portfolio of growth options is strategically astute to have. The advantages, disadvantages and issues surrounding the growth options suggest that it is a risk-benefit premise that underpins the value perceptions from a chosen growth route. Competitive situations and resourcing s aspects also govern the choice a chosen route. 1. Introduction This paper discusses the different routes to growth that an enterprise might take. Given the growing popularity and mixed success of aggressive growth option of mergers and acquisitions, the paper compares and contrasts them with more conservative options like...
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...headquartered in Ashburn, Virginia. The corporation was originally formed as a result of the merger of WorldCom and MCI Communications. For a time, WorldCom was the United States's second largest long distance phone company (after AT&T). WorldCom grew largely by aggressively acquiring other telecommunications companies, most notably MCI Communications. It also owned the Tier 1 ISP UUNET, a major part of the Internet backbone. It was headquartered in Clinton, Mississippi, before being moved to Virginia. Corporate founding The company began as Long Distance Discount Services, Inc. (LDDS) in 1983, based in Hattiesburg, Mississippi. In 1985 LDDS selected Bernard Ebbers to be its CEO. The company went public in 1989 through a merger with Advantage Companies Inc. The company name was changed to LDDS WorldCom in 1995, and later just WorldCom. The company’s growth under WorldCom was fueled primarily through acquisitions during the 1990s and reached its apex with the acquisition of MCI in 1998. Among the companies that were bought or merged with WorldCom were Advanced Communications Corp. (1992), Metromedia Communication Corp. (1993), Resurgens Communications Group(1993), IDB Communications Group, Inc (1994), Williams Technology Group, Inc. (1995), and MFS Communications Company (1996). The acquisition of MFS included UUNET Technologies, Inc., which had been acquired by MFS shortly before the merger with WorldCom. In February 1998, a complex transaction saw WorldCom purchase online pioneer CompuServe from...
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...TABLE OF CONTENTS EXECUTIVE SUMMARY 3 MERGERS & ACQUISITIONS 4 DISTINCTION BETWEEN MERGERS AND ACQUISITIONS 5 TYPES OF MERGERS AND ACQUISITONS 7 Horizontal Merger 7 Vertical Merger 7 Co-Generic Merger 7 Conglomerate Merger 7 RECENT EXAMPLES 8 REASONS FOR MERGERS AND ACQUISITIONS 10 Growth of the company 10 Synergy 10 Diversification and expansion 11 Elimination of competition 11 × REASONS WHY MERGERS AND ACQUISITONS CAN FAIL 12 No common vision 12 Weak leadership and poor governance 12 Poor strategic fit 12 Cultural and Social Differences 13 Incomplete and Inadequate Due Diligence 13 Poorly Managed Integration 13 Overpaying the target company 13 Changing market condition 13 ARTICLE STATING REALITIES OF M&A for HR 14 SUCCESS MANTRA for M & As 15 Cultural integration 15 Change Management 16 Management resources 16 Role of HR in M&A’s 18 Three Stage Model of Mergers and Acquisitions 21 Stage 1-Pre-Combination (HR Issues): 21 Stage 2-Combination and Integration (HR Issues): 22 Stage 3: Solidification and Assessment (HR Issues): 22 Role of the HR Department in M&A Activity 23 INDUSTRY EXAMPLE – Schnieder 26 Challenges due to acquisitions 26 Industry Example – MTS 29 Conclusions 30 At the Company Level 30 At the HR Level 31 REFERENCES 33 EXECUTIVE SUMMARY Mergers and acquisitions, as a means of rejuvenating and restoring business, have become increasingly popular...
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...Management Fall 2009 Non-financial risk assessment in mergers, acquisitions and investments Identifying sources of business risk in the ICT industry Bachelors thesis Erik Allenstr¨m, 1984-11-26 o Fredrik Njurell, 1984-01-30 ¨ Tutor: Osten Ohlsson January 14, 2010 Abstract The number of company mergers and acquisition activities has increased dramatically the last two decades. The reasons for conducting these activities are many and the uncertainties of their results are high. To reduce the uncertainties when making an investment, merger or acquisition it is vital to do a thorough assessment of the risks involved with the activity. This thesis focuses on a specific part of this risk assessment, namely the non-financial risks. Mergers and acquisitions are done in almost all industries around the world and the reasons for and benefits of these activities can vary between industries. We have chosen to investigate the risk assessment of non-financial risks in the Information and Communication Technology (ICT) industry. The thesis aims at investigating what business characteristics, for companies in the ICT industry, that give rise to non-financial risks that must be assessed when doing investments, mergers or acquisitions. Further on we present a risk pattern that points out what business characteristics that are the most important when conducting a risk assessment of non-financial risks on companies in the ICT industry. From a literature study we find evidence that ten different...
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...New Evidence and Perspective on Mergers – A One Page Summary The authors of this article have provided further evidence on the value of mergers and acquisitions by updating the database to include facts for the 1990s to empirical research. They came to a conclusion that mergers seem to create shareholder value, with most of the gains accruing to the target company. In arriving at their conclusion, they reviewed issues on why mergers occur. They reviewed reasons for merger that appear to be more relevant in certain time periods. They argue that industries tend to restructure and consolidate in concentrated periods of time, that these changes occur suddenly, and that they are hard to predict. However, they state that explaining the long-term effects of mergers, and what makes some successful and others not, is still a question that remains largely unanswered. They also identify that, although merger and acquisition activity, occurs in readily identifiable waves over time, these waves are not alike. In fact, the identity of the industries that make up each merger boom varies tremendously. After identifying why and how mergers occur, the authors go ahead to identify winners and losers in the merger game. They identify that the most statistically reliable evidence on whether mergers create value for shareholders comes from traditional short-window event studies. The authors argue that the target firms consistently have abnormal returns of 16% in the announcement period across decade...
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...| Symantec Corporation | Mergers and Acquisitions | | Chris Miller | 11/9/2011 Dan SalmApplied Microeconomic Theory | | * Introduction * This research paper attempts to give a view of the traditional theory relating to Symantec Corporation and their acquisitions and mergers in an attempt to gain market control. Mergers and acquisitions correspond to change within a business looking to gain market power. No other experience is harder to attain for a company, represents more of a challenge, or as hectic as an acquisition or merger. It is vital that the management understands the methods required to perform acquisitions and mergers and that they have a clear understanding of how the procedure works. A corporate merger is the amalgamation of two company’s liabilities and assets developing into a single business element. Acquisitions occur when a large company, typically in a monopolistically competitive market, encompasses a smaller company giving the larger company a monopolistic advantage. A merger occurs when the amalgamation of liabilities and assets is depicted to be between companies of equal market standing. Within a company merger of estimated equals, there is typically an exchange of company stocks where one business distributes new shares to the shareholders of the other company at a specified percentage. * “Those who boast of their commonsense approach to management are very probably just following the ill-formed, half-forgotten, pseudo-scientific nostrum...
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