MERGERS &ACUQITIONS

K.VASUMBA 4th seam

MERGERS OR AMLGAMATION

INTRODUCTION

A merger is said to occur when two or more combinations into one company .one or more companies may merge with an existing company or the may new company.amlgmation is defined under sec 2(1A) as tax act 1961amlgamationas the mergers of one or more companies with another company or the merge two are more companies is called as amalgamation.

Mergers amalgamation may take to forms absorption consolidation

An absorption is a combination of two or more companies into an exesting companyAll compines expect one the loss of their identity in a mergers through absorption

Ex: TFL,TCL

CONSOLIDATION

An absorption is a combination of two or more companies into an existing company. All Companies are legally dissolved and a new entity created. In consolidation companies Transfers all its assets and liabilities to merged companyEx : Hindustan computers Ltd ,Hindustan insurance Ltd , Indian software company ,Indian reprographics Ltd in 1986 as HCL Ltd.

ABSORPTION

HISTORY OF MERGERS Period Name Facet

1897–1904 First Wave Horizontal mergers

1916–1929 Second Wave Vertical mergers

1965–1969 Third Wave Diversified conglomerate mergers

1981–1989 Fourth Wave Congeneric mergers; Hostile takeovers; Corporate Raiding

1992–2000 Fifth Wave Cross-border mergers

2003–2008 Sixth Wave Shareholder Activism, Private Equity, LBO

ACQUISTION OR TAKEOVERAn acquisition also known as a takeover, is the buying of a company (the target )by another An acquisition typically one company –the buyer – that purchases the asset or value to the Seller with the form of cash the securities of the buyer or the asset value of the seller . Two types of take over they are

HOLDING A COMPANY

Ex:

A company can obtain the status of a holding company by acquiring shares of another company A holding company is a company which holds more then half of the normal value of the Equity capital to another company called as subsidiary company

TYPES OF MERGERS

HORIZENTAL MERGER VERTICAL MERGER

CONGLOMERATE CONGENARIC MERGERS

REVERSE MERGER

HORIZENTAL MERGER

When two are more concerns dealings in same product or service join together it is known asHm.to avoid competition between two companies

Ex: Tata industrial finance Ltd with Tata finance Ltd

VERTICAL MERGER

A vertical mergers represents a merger of firms engaged in different stages of production or Distribution of the same product or services

Ex: Reliance petroleum Ltd with Reliance industries Ltd.

CONGLOMERATE MERGER

When two concerns dealings in totally different activates join hands, it will be a case of conglomerate mergers. It may be form of vertical or horizontal

Ex: pepsi co-pizza hut

Product extension merger : it deals with the marketing channels and production processMarket extension merger : it joining to selling the same product but

in separate Geographic MarketsPure merger : there is no relation ship between them

CONGENARIC MERGERS

It occurs where two are merging firms are merger are in the general industry ,but they have Multi buyer/customer

Ex: bank & leasing company prudenals acquisition of Beache & company

REVERSE MERGER

A unique merger called as a reverse merger is used a way of going public without the Expansion and time by an IPO .

MOTIVES OF MERGERS

Strategic financial organizational

New product entrysynergyExpansion and growth

Better Financial planningIncrease in valueIncreasing E.P.S

Managerial effectiveness

PROCESSDEFINE CORPORATE STRATEGY

IMPLE MENTING CORPORATE STRATEGY

TARGET IDENTIFITION

VALUEATION OF MERGER

MERGER IMPLE MENTATION

POST-MERGER INTEGRATION

LEGALE PROCEDUREPermission for merger Information to the stock exchange Approval of board of directors Application in the high court Shareholders & creditors meeting Sanction by the high court Filling of the court orderTransfer of assets and liabilities Payment by cash or securities

ADVANTAGE OF MERGERLimit competition. To developed internally and externally .Over comes problem and gate gains. Achieve diversifition .Investing less but gaining more profit .Displace existing management .Reducing tax liability.It facilitate the security for new product

Lower quantity & reduction in consumer surpluses.Mergers can lead to job losses The new firm can pay lower pries to suppliers.

DISADVANTAGES

Year Purchaser Purchased Transaction value (in USD)

2011 Google Motorola Mobility 9,800,000,000

2011 Microsoft Corporation Skype 8,500,000,000

2011 Berkshire Hathaway Lubrizol 9,220,000,000

2012 Deutsche Telekom MetroPCS 29,000,000,000

2013 Softbank Sprint Corporation 21,600,000,000

2013 Berkshire Hathaway H. J. Heinz Company 28,000,000,000

2013 Microsoft Corporation Nokia Handset & Services Business

7,200,000,000

2014 Facebook WhatsApp 19,000,000,000

2014 Comcast Time Warner Cable 45,200,000,000

2014 AT&T DirecTV 67,100,000,000

CONCLUSITION

In my point of view I agreed to mergers and acquisition when form having position of dissolved not able to recover at that time must and should and the same time heavy competition