...|Merger and Acquisition | INDEX |S.NO |Contents |Page No. | |1 |Abstract |3 | |2 |Introduction |4 | |3 |Types of Mergers |4 | |4 |Reasons for Mergers and Acquisition |5 | |5 |Advantages of Mergers and Acquisition |7 | |6 |Failure of Mergers and Acquisition |10 | |7 | Making it Happen |13 | |8 |Conclusion |14 | |9 |Bibliography |15 | Abstract: As a corporate strategy, Mergers and Acquisition have been used to expand size and growth of business. In this report this corporate strategy is investigated...
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...Mergers And Acquisitions: Shareholder Wealth Effects Mergers and acquisition otherwise identified as M& A defines an aspect of corporate management strategy, as well as corporate finance that deal with the selling, the buying and dividing of the various companies. It also involves combining the various companies and similarly oriented identities which could assist a given enterprise to grow rapidly within its sector of origin, or even a new field or location even without necessarily creating some subsidiary or joint type of a venture. The actual distinction which exists between a merger and an acquisition has been seen to become increasingly blurred in several aspects. This has been seen to be significant particularly in terms some ultimate economic outcome. Acquisition normally refers to the process of significantly smaller firms by a significantly large firm. However, it is notable that in some instances, a smaller firm could acquire some management control of a significantly larger firm or even a longer established firm in an effort to retain the real name of the latter for some past acquisition entity through combined efforts. This normally results into a reverse takeover and affects all the shareholders who are involved within the two firms. According to research study done by Ang and Kohers across the US territory, a reverse merger could also affect the shareholders in significant ways. This is because the merger enables a given private company to become publicly...
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...Individual research objective Recently, there has been a lot of news about companies’ combination deals. Especially, in the telecommunication sector, mergers are the trend of the moment. M&A deals grab headlines, but what does this all mean to investors? This individual research tries to figure out the effects of mergers and acquisitions and what happens to the stock price when a company is bought out. Definition The terms of merger and acquisition mean slightly different things. Merger When two firms, often of about the same size, agree to go forward as a single new company rather than remain separately owned and operated, mergers happen. Usually mergers occur in a friendly setting where executives from the respective companies participate in and try to ensure a successful combination of all parts. Mergers are often financed by an all stock deal (a stock swap). An all stock deal occurs when all of the owners of the outstanding stock of either company get the same amount (in value) of stock in the new combined company. Acquisition When one company takes over another and clearly established itself as the new owner, the purchase is called an acquisition. Unlike mergers, acquisitions happen through a hostile takeover by purchasing the majority of outstanding shares of a company in the open market. Acquisitions can be carried out in a number of ways, including exchanging cash, stock, debt, or combinations thereof. In an acquisition, shares of the acquiring company continue...
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...Mergers & Acquisitions in India With specific reference to Competition Law This research paper is a copyright of Nishith Desai Associates. No reader should act on the basis of any statement contained herein without seeking professional advice. The authors and the firm expressly disclaim all and any liability to any person who has read this research paper, or otherwise, in respect of anything, consequences by any such and of of anything in February 1, 2010 done, or omitted to be done person reliance upon the contents of this research paper. Nishith Desai Associates www.nishithdesai.com TABLE OF CONTENTS I. II. Introduction .................................................................................................................................................... 3 Mergers and Amalgamations: Key Corporate and Securities Laws Considerations. ...................................... 7 III. Acquisitions: Key Corporate and Securities Laws Considerations................................................................. 10 IV. Competition Law ............................................................................................................................................ 21 V. Exchange Control............................................................................................................................................ 24 VI. Taxes and Duties ...................................................................................................
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...Then authors mention that mergers are still influenced by other national institutions. To begin with, they illustrate the factors such as nation’s legal origin, currency exchange rate and gross domestic product (GDP). Seung Hee Choi & Bang Nam Jeon (2011) found that GDP shows the largest contribution in the merger deal frequency model. When a country is just at the high speed development of economy period, with the increase of GDP, companies will have a better environment to carry on the merger activities. Secondly, authors stress that economic environment will have a significant impact on the acquisition activity. For example, countries who have signed a bilateral investment treaty or a double-taxation treaty would have a different performance according to the data collected by authors. Huizinga and Voget（2009）state that impose high levels of international double taxation are less likely to attract the parent companies of newly created multinational firms. On the contrary, some preferential policies like tax sparing will motivate the merger activities between nations. Last but not least, authors state that religion, geographic distance and language are vital cultural institutions which have a strong effect on economic results. For example, Piekkari, Vaara, Tienari and Säntti(2005) study that compared to domestic mergers, cross-border deals introduce extra layers of difficulty. Language and communication challenges are intertwined with cultural differences. Under the cross-border...
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...Krishna Bank. * 2008 HDFC Bank acquired Centurion Bank of Punjab. The swap ratio is expected to be around 1:25-30,” said a banking source. The merger will make HDFC Bank the country’s seventh largest bank after Bank of India (BoI) and ahead of IDBI Bank, from the current 10th position. The merger talks between the two banks began in January 2008 after the principal shareholders of CBoP – Bank Muscat with 14.02 per cent stake, Sabre Capital with 3.48 per cent stake and Kephinance Investment (Mauritius) with 6.13 per cent — decided to exit. 1) HDFC Bank Board on 25th February 2008 approved the acquisition of Centurion Bank of Punjab (CBoP) for Rs 9,510 crore. BENEFITS FROM THIS DEAL * The HDFC Bank, which currently spans India with its chain of 746 branches, will add to itself 394 branches of the CBoP to itself, to make its network bigger and stronger. The merger talks between the two banks began in January 2008, after the principal shareholders of CBoP – Bank Muscat with 14.02 per cent stake, Sabre Capital with 3.48 per cent stake and the Kephinance Investment (Mauritius) with 6.13 per cent stake decided to move away from this partnership. * The HDFC Bank is further expected to pay Rs 100 billion to Rs 120 billion in shares for acquiring the CBoP. In what claims to be the largest ever private bank merger, the share swap ratio stands at 1:29, that is every shareholder of CBoP will get one share of HDFC Bank for...
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...including advanced industrial components as chains, cables, nuts & bolts, castings & forgings etc. The firm is considered a low-cost producer that possessed unusual production knowledge. The main issue discussed in this case study was the idea of merger between FVC and RSE could bring profit to both of the firms. First FVC become a subsidiary of RSE with the deal of preserving FVC identity. Then the two sides have explored some of the governance and compensation issues in the merger. The price of the deal was less clear as FVC traded on the NASDAQ and RSE traded on the American Stock Exchanges. The benefits of merger and acquisition between FVC and RSE were the new firm will have an increased market share which reduces competition. This reduction in competition can be damaging to the public interest, but help the firm to gain more profits. However both FVC and RSE will have no control power. However the question that has been discussed here was does FVC and RSE ready for merger and acquisition. The answered here is no as both firm didn’t analyze their current situation. Next both firm neither don’t have the proper discussion on the share holding distribution nor analyze their financial situation. The firms should have analyzed the merger and acquisition motives and also financial evaluation. Following was the identified issues in motives and also financial evaluation of both the firm; A) Strategic Motives – Ignorance, No common vision and Due to diligence B) Financial Motives...
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...The Merger – A Case Analysis Report I. Facts of the Case Peter Lundgren had taken too much coffee before the meeting with Stanley Ashton. They were collaborating as co-CEOs of Arlington Inc., a company which resulted from a merger of Arlington Oil with Duns Ford Petroleum Co. This would be an asset in the industry. The merger envisioned a corporation in the rough-and-tumble oil industry that would achieve significant cost savings in refining, marketing, and transportation, as well as capital to fund worldwide exploration and production. The most challenging part was the integration of two organizations has begun, which is believed to generate effective human resource integration strategy that will result to operating efficiencies. Arlington was left with two managers for almost every available position at upper and middle management level. Prior to the merger, the top levels had been selected. Lundgren and Ashton had decided a negotiation that they could keep their most trusted executives on board. Peter has always preferred making decisions by instinct and likes to talk o people face to face to assess if they are fit for the position, becoming biased toward some of his own executives. Ashton, on the other hand, was vey objective and has a very conventional way of making his executives pass through a series of tests. Peter was concerned in the idea that an objective process such as that of Ashton would make the best people around him leave, when they undergo...
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...one additional question which is mandatory and not disclosed here. 1) . Differentiate between the following types of mergers and acquisitions: a. Subsidiary mergers b. Vertical acquisitions c. Horizontal mergers d. Conglomerate deals 2) What impact did the Sherman Antitrust Act of 1890 have on the first merger wave? Explain why this was the case. 3) Explain some of the unique characteristics of the fourth merger wave of the 1980s. In particular, discuss the incidence of hostile deals and the use of leverage during this period. 4) How do antitrust regulators use the Hirschman-Hirfindahl index? What other quantitative tools do they use when evaluating the competitive effects of mergers? 5) What are the main types of state antitakeover laws? Describe how each works. 6. Explain the merger approval process. What happens to shareholders who do not approve of the merger when the majority necessary for approval agree to the deal? Do these shareholders have any specific rights that are relevant to the deal? 7. Contrast the first and second merger waves. In what ways were they different and how were they similar? 8. What role did investment bankers, such as JP Morgan, play in the first merger wave? 9. What were some of the unique characteristics of the third merger wave? Explain how companies used the P/E game in the third merger wave. 10. Explain the main features of Sections 13D and 14D of the Williams Act. What are the requirements and limitations...
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...with another company. A merger is sometimes a voluntary and sometimes and involuntary transaction. If a company has found itself in a place of financial difficulty or is simply exhausted all its resources to remain open, a merger may be the only way its employees can retain their position. The alternative would be to close its doors and give up. Above we will discuss the differences between horizontal, vertical, and conglomerate mergers and how these differ from a joint venture. A merger is off and on again an intentional and some of the time and automatic exchange. On the off chance that an organization has ended up in a position of budgetary trouble or is basically depleted all its assets to stay open, a merger may be the main way its representatives can hold their position. The option would be to close its entryways and surrender. Above we will talk about the contrasts between flat, vertical, and aggregate mergers and how these vary from a joint wander. In conclusion, sometimes a merger is voluntary and sometimes unintentional transaction. If an organization has some financial issues within the company or is basically depleted all its assets to stay open, a merger may be the main way its representatives can hold their position. The option would be to close its entryways and surrender. Above we will talk about the contrasts between flat, vertical, and aggregate mergers and how these vary from a joint wander. Every time a merger is about to happened it is best...
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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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...past dollars and cents. Corporations who are able to acquire or merge with other companies are able to expand upon their ability to forge partnerships with other corporate leaders. They are often able to expand their services internationally to gain more profits and extend their brand. Corporations, such as Toys“R”Us, Inc. have been able to benefit from acquisitions in ways that corporations, such as smaller businesses have not. Through the evaluation of the strategies that were utilized by Toys“R”Us, Inc. and its international business-level and corporate-level strategies, one can better understand strategies that smaller businesses like Bunnies by the Bay for example could develop to increase their profits through acquisitions and mergers, as well as business-level and corporate-level strategies they can develop to expand their services internationally. Toys“R”Us, Inc. Toys“R”Us, Inc. has enjoyed great success as one of the largest toy retailing chains in the world. Toys“R”Us, Inc. is the world’s leading dedicated toy and baby products retailer, offering a differentiated shopping experience through its family of brands. Merchandise is sold in 867 Toys“R”Us and Babies“R”Us stores in the United States and Puerto Rico, and in more than 725 international stores and over 240 licensed stores in 37 countries and jurisdictions. In addition, it exclusively operates the legendary FAO Schwarz® brand and sells extraordinary toys in the brand’s flagship store on Fifth Avenue in New...
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...Cogent Communications, Intel, and Others: Mergers Go More Smoothly When Your Data Are Ready Sheila D. Clemmons Ashford University Instructor Dr. Riley March 25, 2013 Place yourself in the role of a manager at a company undergoing a merge or acquisition. What would be the most important things customers would expect from you while still in that process? What role would IT play in meeting those expectations? Provide at least three examples. To help ensure communication and what the company expects, the company’s strategic planning process should confirm the direction of the company. Each employee should know what is expected of them. They should know the strategic goals of the company and what they need to do to help the company reach their goals. “Customers are the most important assets of the organization. Mostly organizations are merged and acquired for the customer trust they have. It’s a very tough as well as important job to keep and hold the initial customers, after the organization is acquired and merged. Whoever owns the organization customers expects smooth service and generous treatment. They expect their works to be done the same way it used to be or may even be a better way. They don’t want their services and work to suffer because of the trade. As a manager in order to hold customers, I need to take care, whether they are happy with new team or not.” (www.w2wlink.com/...Set-Standard-High Expectations-Accountabilty). IT could help...
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... * * A Level Blog * Shop * Ask question You are here: Home > Economics help blog > Pros and Cons of Mergers Pros and Cons of Mergers by Tejvan Pettinger on February 22, 2012 in economics A look at the pros and cons of mergers. Are mergers in the public interest or are mergers just beneficial for top executives and shareholders? When looking at mergers it is important to look at the subject on a case by case basis as each merger has a different possible benefits and costs. These are the most likely advantages and disadvantages of a merger. Pros 1. Network Economies. In some industries, firms need to provide a national network. This means there are very significant economies of scale. A national network may imply the most efficient number of firms in the industry is one. For example, when T-Mobile merged with Orange in the UK, they justified the merger on the grounds that: “The ambition is to combine both the Orange and T-Mobile networks, cut out duplication, and create a single super-network. For customers it will mean bigger network and better coverage, while reducing the number of stations and sites – which is good for cost reduction as well as being good for the environment.” 2. Research and development. In some industries, it is important to invest in research and development to discover new products / technology. A merger enables the firm to be more profitable and have greater funds for research and development. This is important in industries...
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...Excellence in Financial Management Course 7: Mergers & Acquisitions (Part 1) Prepared by: Matt H. Evans, CPA, CMA, CFM This course (part 1) provides a concise overview of the merger and acquisition process, including the legal process, federal regulations and due diligence. The purpose of the course is to give the user a solid understanding of how mergers and acquisitions work. This course is recommended for 2 hours of Continuing Professional Education. In order to receive credit, you will need to pass a multiple choice exam which is administered over the internet at www.exinfm.com/training Published March 2000 Chapter 1 Basic Concepts Mergers and acquisitions represent the ultimate in change for a business. No other event is more difficult, challenging, or chaotic as a merger and acquisition. It is imperative that everyone involved in the process has a clear understanding of how the process works. Hopefully this short course will provide you with a better appreciation of what is involved. You might be asking yourself, why do I need to learn the merger and acquisition (M & A) process? Well for starters, mergers and acquisitions are now a normal way of life within the business world. In today's global, competitive environment, mergers are sometimes the only means for long-term survival. In other cases, such as Cisco Systems, mergers are a strategic component for generating long-term growth. Additionally, many entrepreneurs...
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