...Mergers and acquisitions (M&A) are both aspects of strategic management, corporate finance and 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. Methods to pursue a strategy can be divided into three categories: internal growth, external growth (mergers, acquisitions, disposals) and collaboration (alliances and partnerships). Of course, these conditions can also affect other policies, such as the consolidation of a competitive position or the establishment of an advantage through economies of scale. In this task, we will focus on mergers and acquisitions. 1) Definitions: An acquisition corresponds to the repurchase of an organization by another organization, while a merger is the decision mutually granted by organizations to share their ownership. Most of the acquisitions are friendly: both parts get on the terms of the repurchase, and the direction of the target recommends to his(her) shareholders to accept the offer. However, certain acquisitions are hostile: the buyer proposes then a price to the shareholders of the target against the advice of his managers. The choice of the shareholders is then decisive. The direction(management) of Cadbury so initially rejected the hostile offer of Kraft by looking for a more friendly...
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...Executive Summary The reason behind mergers and acquisitions is to create more value as two organisations put together would be more valuable than two separate organisations whereas the basic theory behind buying an organisation is to build shareholder value over and above of the sum of the two organisations. Mergers and acquisitions have become a regular occurrence of growth for organisations in the recent years. Organisations are presented with likely wider market share as well as open to a more diversified market. Mergers has most times been seen to be profitable both competition and consumers by allowing companies to run more successfully. It may occasionally lead to decrease competition in some ways and highly complicated as can be seen in today's world. There are laws governing mergers and acquisitions in the UK which is covered in the city Code on Takeovers and Mergers which is created to ensure that shareholders are cared for and not denied the privilege to decide on the value of a takeover and that shareholders of the same standard are afforded equal rights by an offeror. CSR is the process of evaluating a company's impact on the society and assessing their responsibilities. It defines areas of concern and initiatives to better relations with the people as well as the environments affected by business functions. Shell Plc certainly needs to do more to improve the quality of life in the society in which they operate as well as the environment where they...
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...Mergers and Acquisitions Tasha Powers Dr. Michael Laverty Business 508 – Contemporary Business November 17, 2014 A merger or acquisition is a combination of two companies where one corporation is completely absorbed by another corporation. The less essential company loses its identity and becomes part of the more imperative corporation, which retains its identity. A merger extinguishes the merged corporation, and the surviving corporation assumes all the rights, privileges, and liabilities of the merged corporation (Gomes, 2011). A merger is not the same as a consolidation, in which two corporations lose their separate identities and unite to form a completely new corporation. Federal and state laws regulate mergers and acquisitions. Regulation is based on the concern that mergers inevitably eliminate competition between the merging firms (Helms, 1996). This concern is most delicate where the participants are direct rivals, because courts often presume that such arrangements are more prone to restrict output and to increase prices. The fear that mergers and acquisitions reduce competition has meant that the government carefully scrutinizes proposed mergers. On the other hand, since the 1980s, the federal government has become less aggressive in seeking the prevention of mergers (Gomes, 2011). Mergers appear in three forms, based on the competitive relationships between the merging parties. In a horizontal...
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...Overview of Mergers and Acquisitions Mergers and acquisitions have been taking place since World War I, there is a lot of history to why they came about and the changes in regulation as the application of it has progressed. Many companies end because of a merger or acquisition while other companies become market powers because of a merger. Mergers and acquisitions occur for a variety of reasons and there are a number of ways that it can be carried out. Understanding what makes a company successful or unsuccessful can help one understand why a company merges with another company or acquires another company. One must also understand what contributes to making a merger or acquisition a success or a failure. There are many things that keep a company successful. The corporate culture is very important as well as the geographical place that it is in. The people who run it, both upper management and lower management, can also make or break a business. When one of these aspects goes wrong and the company is going down hill a merger or acquisition is a big possibility. In many instances it is the only thing that can save the life of a business. A merger is defined as two firms whom are usually the same size that agree to join as one company that is operated and owned as one (investopedia.com). It is a combination of two companies to create a new company. All of the assets and liabilities of the companies are shared by the one company that is formed. An acquisition is slightly...
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...Valuation Related to Mergers and Acquisitions The methods of valuation related to mergers and acquisitions can be broadly categorized into three types, namely market based method, income based method, as well as asset based method. All these methods carry a significant degree of importance in the context of mergers and acquisitions. There are numerous elements, which ascertain whether a particular firm should be acquired or not. The financial steadiness of the firm, which is to be taken over is quite important to find out. In addition, the financial track record over the last few years and trends demonstrated in the macroeconomic ratio and indices require to be analyzed. Among the methods of valuation related to mergers and acquisitions, the market based method might be regarded as more appropriate, nevertheless, all the valuation methods are crucial, taking into account the condition that is prevalent at the time when a merger or acquisition is going to take place. Methods of Valuation Related to Mergers and Acquisitions The methods of valuation associated with mergers and acquisitions can be broadly classified into the following types: 1) Market Based Method In valuation of mergers and acquisitions with the help of market based method, the different attributes of the firm which is going to be acquired are compared with the similar types of attributes of other firms in the market. These firms (not the firm in question) normally have a market value that has been set up earlier...
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...Mergers, Acquisitions and Corporate Restructuring II MERGERS, ACQUISITIONS AND CORPORATE RESTRUCTURING Mergers, Acquisitions and Corporate Restructuring Edited by Chandrashekar Krishnamurti Vishwanath S.R. Copyright © Chandrashekar Krishnamurti and Vishwanath S.R., 2008 All rights reserved. No part of this book may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage or retrieval system, without permission in writing from the publisher. First published in 2008 by Response Books Business Books from SAGE B1/I-1 Mohan Cooperative Industrial Area Mathura Road, New Delhi 110 044, India SAGE Publications Inc 2455 Teller Road Thousand Oaks, California 91320, USA SAGE Publications Ltd 1 Oliver’s Yard, 55 City Road London EC1Y 1SP, United Kingdom SAGE Publications Asia-Pacific Pte Ltd 33 Pekin Street #02-01 Far East Square Singapore 048763 Published by Vivek Mehra for Response Books, typeset in 9.5/13 pt Berthold Baskerville by Star Compugraphics Private Limited, Delhi and printed at Chaman Enterprises, New Delhi. Library of Congress Cataloging-in-Publication Data Mergers, acquisitions and corporate restructuring/edited by Chandrashekar Krishnamurti, Vishwanath S.R. p. cm. Includes references and index. 1. Consolidation and merger of corporations. Corporate reorganizations. I. Vishwanath, S.R., 1971– II. Krishnamurti, Chandrashekar, 1956– HG4028.M4 .M44 658.1/6 22 2008...
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...Assignment 2: Mergers and Acquisitions Apple is one of the most popular brands leading and technology companies of today. They are heavily known for their apps and products. Although Apple is a popular brand, they had limited search and discovery features to the App Store. Because of the deficiencies in the search, Apple sought to improve their discovery features. Apple covered the search engine, Chomp in November 2009 to announce their seed funding (Dilger, 2012). Chomp is a search engine designed to find and discover apps for iPhone, iPad and Android. The search engine allowed users to search for apps based on what they did and not by what they were named. Since then, they’ve grown their scope to include not only iPhone apps, but Android apps as well. In February 2012, Apple’s acquisition of search startup Chomp provided a relief to App Store’s app discovery problems (Golson, 2012). Although, Apple hasn’t released a public statement on why it purchased Chomp, and it remains to be seen exactly how Chomp’s technology could change app discovery within the App Store (Bonnington, 2012). It is evident the decision to acquire was made due to Apple’s limited search and discovery features. If someone searched for an app under Apple’s past model, it would take several searches to find a particular App. Chomp, however, allowed a person to search with much greater hint and intent (Bonnington, 2012) and the results provide the seeker exactly what they were looking for. Apple’s search...
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...Mergers and Acquisitions Carrie Steptoe Contemporary Business/508 May 18, 2014 Facebook is one the of the nations’ leading social network sites in the United States, accumulating over one billion members since its creation back in 2004. So it really wasn’t a surprise to learn that Facebook had interest in acquiring Instagram, In April of 2012, Facebook acquired Instagram for one billion dollars, for their photo sharing mobile app. Instagram is a social network site that is an online photo and video sharing and network service that enables its users to take pictures and videos, put on digital filter to them, and share them on a variety of social networking services, like Facebook. The merge between Facebook and Instagram is considered one of the largest merging tech deals to date. Some would say it was a good move for Facebook to merge with the up and coming social networking sites, because it would increase users along as keeping their loyal users, by providing new features that Instagram offers. Others observing may say Facebook acquiring Instagram was clearly a defensive move, made in order for Facebook to keep its leading spot in social media network sites, and would probably say the merge is a bad business move because of its hastiness of spending one billion dollars for a startup company with no revenue at the time. However, the two companies merging was a historical moment in business history. One reason I feel Facebook decided to acquire Instagram, is because they...
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...Merger and Acquisitions Cisco's growth strategy is based on identifying and driving market transitions. There Corporate Development focuses on acquisitions that help Cisco capture market transitions. Cisco separates acquisitions into three categories: market acceleration, market expansion, and new market entry. They try to determine what the target companies might offer differently as assets to include great talent and technology, mature products and solutions, or new go-to-market and business models. Cisco seeks acquisitions where there is not only a strong business case but also a shared business and technological vision, and where compatibility of core values and culture foster an environment for success. I would recommend a merger with Finisar Corporation, it is a global technology leader in optical communications components and subsystem. Finisar products enable high-speed voice, video and data communications for networking, storage, wireless, and cable TV applications. Over the past two decades, Finisar has provided critical breakthroughs in optics technologies and has supplied system manufacturers with the production volumes needed to meet the exploding demand for network bandwidth and storage. Finisar's industry-leading optical products include transceivers/transponders, active cables, WSS ROADMs, optical instruments, and active and passive components. The company has a revenue growth of 58%, profit margin of 7% and earnings yield of 4.3%, it is a very strong company...
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...MERGERS AND ACQUISITIONS TABLE OF CONTENTS |TITLE |PAGE NUMBER | |ABSTRACT |3 | |INTRODUCTION |4 | |THE ACCOUNTING METHODS |7 | | VALUATION |8 | | TYPES OF MERGERS |9 | |WHY MERGERS |12 | |STATUTORY REGULATIONS |13 | |COMPARISON OF MERGERS IN INDIA AND CHINA |16 | |ARCELLOR MITTAL DEAL |17 | |DAIMLER CHRYSLER DEAL |19 ...
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...Mergers and Acquisitions CHAPTER 21 OPENING CASE I n April 2007, Netherlands-based ABN AMRO and U.K.-based Barclays announced a merger that would create the world’s largest asset manager as well as one of the world’s five largest banks. The value of the deal was about €67 billion ($91.07 billion). Under the terms of the merger, Barclays would offer 3.225 shares of the new company for each share held by ABN AMRO shareholders. Also, ABN AMRO agreed to sell LaSalle Bank to Bank of America for $21 billion, which would result in a €12 billion distribution to shareholders. How do companies like ABN AMRO and Barclays determine whether a merger is a good idea? This chapter explores reasons that mergers should take place, and, just as important, reasons why they should not. There is no more dramatic or controversial activity in corporate finance than the acquisition of one firm by another or the merger of two firms. It is the stuff of headlines in the financial press, and it is occasionally an embarrassing source of scandal. The acquisition of one firm by another is, of course, an investment made under uncertainty, and the basic principles of valuation apply. One firm should acquire another only if doing so generates a positive net present value for the shareholders of the acquiring firm. However, because the NPV of an acquisition candidate can be difficult to determine, mergers and acquisitions, or M&A activities, are interesting topics in their own right. Some of the special...
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...TOPIC : MERGERS AND ACQUISITIONS ARTICLE REVIEWED: Determinants of Cross-Border Merger & Acquisition Performance of Chinese Enterprises AUTHORS: Wu Changqi Professor, Peking University Xie Ningling Assistant Analyst, Sun Hung Kai Properties Ltd JOURNAL: Procedia Social and Behavioural Sciences 2 pg 6896-6905 PUBLISHED YEAR: 2010 INTRODUCTION The rapid economic growth of China since the past thirty years as enabled large numbers of Chinese enterprises to grow and gain competiveness. One of their sources of growth is through international expansion which is achieve by acquiring existing businesses abroad which is known as cross-border mergers and acquisitions (M&A). Cross –border mergers and acquisitions by Chinese firms has increased steadily up to US$ 8.139 billion between 1988 to 2003 with $216 million averagely each year, most of which occurred after 1997. Some of the Chinese enterprises that involve in cross- border M&A are Shanghai Electric Group which purchased Japanese printing machine manufacturer in 2002, TCL acquiring Schneider in Germany in 2003 and Lenovo purchased PC business of IBM in 2004. KEY WORDS Cross- border – is an activity that took place between country to country Mergers and Acquisitions (M&A) - is an aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing...
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...Introduction Mergers and acquisition (M&A) varies from country to country. Some countries have laws regulating M&A while others don’t. M&A basically is a combination of two or more businesses into one new business. What defines the merger or acquisition is how the combination is brought about. Mergers are usually negotiated between parties before the combination occurs while acquisition does not necessarily have to go through negotiations between parties. Mergers and Acquisition can succeed or fail base on a number of factors. This paper will examine the concept of mergers and acquisition, why M&A fail and possible recommendations Input Businesses sometimes merge or acquire to improve on their competitiveness and to meet their strategic objectives. Mergers and acquisition can come about because of stiff competition in the market or to create economies of scale or to enter new markets, or to diversify or a combination of many factors as mentioned in this sentence. Sometimes the only reason an acquire may purchase a business is for speculative profits, in that the sole purpose is to purchase with the intention to split them into smaller pieces and selling them or parts thereof for a price which is much higher than the acquiring price. Mergers and acquisition can also come about because of management failures. This situation can come about because management was unable to move the company in a positive direction which would have maximize shareholders wealth. Some of...
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...Introduction Merger and acquisition both are strategic decision and an aspect of corporate strategy. One plus one makes three: this equation is the special alchemy of a merger or an acquisition. The key principle behind buying a company is to create shareholder value over and above that of the sum of the two companies. Two companies together are more valuable than two separate companies - at least, that's the reasoning behind merger and acquisition. Most histories of merger and acquisition begin in the late 19th U.S. However, mergers coincide historically with the existence of companies. In 1708, for example, the East India Company merged with an erstwhile competitor to restore its monopoly over Indian trade. In 1784, the Italian Monte dei Paschi and Monte Pio banks were united as the Monti Reuniti. In 1821, the Hudson's Bay Company merged with the rival North West Company. Merger The combining of two or more companies, generally by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock. Basically, when two companies become one. This decision is usually mutual between both firms. A merger can happen when two companies decide to combine into one entity. According to Webster’s Business Dictionary- “A blending of two or more companies by acquisition, in which one company purchases others and they are absorbed into the parent company, or by consolidation, in which a new corporation is formed to absorb the merging...
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...Assignment 2: Mergers and Acquisitions Ryan Butler Dr. Laura Poluka BUS508 30 July 2014 Augusta Campus, Strayer University Mergers and Acquisitions Examine the circumstances that resulted in the merger or acquisition for the selected company. Speculate on two (2) reasons why the resulting decision to merge or to acquire / be acquired was made. The two airlines American Airlines and US Airways merged on December 9th, 2013 to form the American Airline Group that became the biggest airline in the world. This merger was formed by the increased competition that airlines are facing in the business today. The merger presented an opportunity for both airlines to exploit the benefits of an extended network that would result after merging as opposed to when each operates independently. One of the main circumstances that surrounded the merger was the impending bankruptcy of American Airlines. The company had filed for bankruptcy in 2011 although it reverted to profitability in July the same year. The merger would increase access to business opportunities for both airlines, especially American Airlines that would reduce its exposure to financial risks, which was the initial cause for the company filing for bankruptcy. The merger would create increased synergies that would be evident through increased financial strength and flexibility in the market (DePamphilis, 2008). Each of the merged entities would have access to more destinations and larger clientele. Each of them would...
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